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Explanations of the inconsistencies in survey respondents’ forecasts

By Michael P. Clements

Abstract

A comparison of the point forecasts and the central tendencies of probability distributions of inflation and output growth of the SPF indicates that the point forecasts are sometimes optimistic relative to the probability distributions. We consider and evaluate a number of possible explanations for this finding, including the degree of uncertainty concerning the future, computational costs, delayed updating, and asymmetric loss. We also consider the relative accuracy of the two sets of forecasts

Topics: HB
Publisher: University of Warwick, Department of Economics
Year: 2008
OAI identifier: oai:wrap.warwick.ac.uk:1346

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