Who Believes in Fiscal Stimulus? Forecaster Heterogeneity and the Transmission of Fiscal News

Elahe Boskabadi, Hyeongwoo Kim (), Peng Shao and Shuwei Zhang

No auwp2026-08, Auburn Economics Working Paper Series from Department of Economics, Auburn University

Abstract: This paper studies heterogeneity in how forecasters translate fiscal stimulus news into longer-term output expectations. Using individual-level data from the Survey of Professional Forecasters, we classify forecasters according to their relative positions in the distributions of federal government spending and real GDP forecasts. A state-space model with drifting coefficients estimates the time-varying pass-through from near-term spending forecast revisions to longer-term GDP forecast revisions. We find pronounced cross-sectional asymmetry early in the sample: lower-tail forecasters exhibit substantially weaker pass-through than upper-tail forecasters, reflecting more pessimistic responses to fiscal news. Over time, lower-tail pass-through rises markedly and converges toward the relatively stable response of optimists, narrowing the initial disagreement over the transmission of fiscal news.

Keywords: Forecast Revisions; Survey of Professional Forecasters; Heterogeneous Beliefs; Kalman Filter; Kalman Smoother (search for similar items in EconPapers)
JEL-codes: C32 D84 E37 E62 (search for similar items in EconPapers)
Date: 2026-10
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cla.auburn.edu/econwp/Archives/2026/2026-08.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:abn:wpaper:auwp2026-08

Access Statistics for this paper

More papers in Auburn Economics Working Paper Series from Department of Economics, Auburn University Contact information at EDIRC.
Bibliographic data for series maintained by Hyeongwoo Kim ().