"Biased Forecasts to Affect Voting Decisions? The Brexit Case"
with Davide Cipullo
Latest version (June 2020)
Sveriges Riksbank Working Paper Series (March 2019)Uppsala University Working Paper Series (March 2019)EEA 2019 Congress Press Release
This paper introduces macroeconomic forecasters as political agents and suggests that they use their forecasts to influence voting outcomes. We develop a probabilistic voting model in which voters do not have complete information about the future states of the economy and have to rely on macroeconomic forecasters. The model predicts that it is optimal for forecasters with economic interest (stakes) and influence to publish biased forecasts prior to a referendum. We test our theory using high-frequency data at the forecaster level surrounding the Brexit referendum. The results show that forecasters with stakes and influence released much more pessimistic and incorrect estimates for GDP growth subject to the leave outcome than other forecasters.
"Inefficient Use of Competitors’ Forecasts?"
Latest version (June 2020)
Sveriges Riksbank Working Paper Series (October 2019)Uppsala University Working Paper Series (October 2019)
This paper assesses to what extent forecasters make efficient use of competitors’ forecasts. Using a panel of forecasters, I find that forecasters underuse information from their competitors in their forecasts for current and next year’s annual GDP growth and inflation. The results also show that forecasters increase the attention to their competitors as the forecast horizon decreases. In a model of noisy information with fixed target forecasts, I confirm the empirical results of underuse of competitors’ information. I also extend the model to include a revision cost and show how this can only explain the observed inefficiency and observed horizon dynamics if we assume horizon specific discounting. Using the same framework, I also rule out overconfidence as the main explanation of the observed behavior.
Work in Progress
- Electoral Cycles in Macroeconomic Forecasts (with Davide Cipullo)
- Withering Cash: Is Sweden ahead of the curve or just special? (with Hanna Armelius and Carl Andreas Claussen)
- The Effect of Increasing the Transparency of Monetary Policy Committees (with Mikael Apel and Marianna Blix Grimaldi)
Kommentar på Johan Lönnroths artikel ”Brev till den parlamentariska riksbankskommittén” (2018)Ekonomisk Debatt 5/2018 (with Jesper Lindé)Links: Swedish
Do Swedish Forecasters Properly Account for Sweden’s International Dependence? (2017)Sveriges Riksbank Economic Review 2017:2 (with Jesper Lindé)Links: English, Swedish
It’s a myth that the Riksbank’s forecasts have been governed by models (2017)Sveriges Riksbank Economic Review 2017:1 (with Jesper Lindé)Links: English, Swedish
En myt att Riksbankens prognoser styrts av modeller (2016)Ekonomisk Debatt 8/2016 (with Jesper Lindé)Links: Swedish
An assessment of the Riksbank’s international forecasts (2015)Economic Commentaries, No. 14, 2015, Sveriges Riksbank (with Ted Aranki)Links: English, Swedish
Interest and inflation rates through the lens of the theory of Irving Fisher (2015)Sveriges Riksbank Economic Review 2015:2 (with Magnus Jonsson)Links: English, Swedish