Conomic Forecasts and Microeconomic Forecasters in the Rvey of Professional Forecastors

Do professional forecasters distort their reported forecasts in a way that compromises accuracy? New research in the theory of forecasting suggests such a possibility. In a recent paper, Owen Lamont finds that forecasters in the Business Week survey make more radical forecasts as they gain experience. In this paper, I use forecasts from the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters to test the robustness of Lamont’s results. My results contradict Lamont's. However, careful examination of a methodological difference in the two surveys suggests a more general theory of forecasting that accounts for both sets of results. 3 NOTE: This Working Paper references figures not available with this Internet version. If you’d like a copy of the paper with figures, please call the Research Department’s Publications Desk at 215-574-6428.