Information Rigidities: Comparing Average and Individual Forecasts for a Large International Panel

Author/Editor:

Jonas Dovern ; Ulrich Fritsche ; Prakash Loungani ; Natalia T. Tamirisa

Publication Date:

February 12, 2014

Electronic Access:

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Summary:

We study forecasts for real GDP growth using a large panel of individual forecasts from 36 advanced and emerging economies during 1989–2010. We show that the degree of information rigidity in average forecasts is substantially higher than that in individual forecasts. Individual level forecasts are updated quite frequently, a behavior more in line “noisy” information models (Woodford, 2002; Sims, 2003) than with the assumptions of the sticky information model (Mankiw and Reis, 2002). While there are cross-country variations in information rigidity, there is no systematic difference between advanced and emerging economies.

Series:

Working Paper No. 2014/031

Subject:

Econometric analysis Economic theory Estimation techniques Expenditure Public expenditure review Rational expectations

English

Publication Date:

February 12, 2014

ISBN/ISSN:

9781484305201/1018-5941

Stock No:

WPIEA2014031

Pages:

24

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