Forecasting Quality of Professionals: Does Affiliation Matter?

25 Pages Posted: 20 Jan 2016 Last revised: 24 Jan 2017

Aron Veress

University of Liechtenstein

Lars Kaiser

University of Liechtenstein

Date Written: January 19, 2016

Abstract

Economists fulfilling a public mission - namely academics, Fed and government employees - demonstrate a tendency towards being pessimistic, whereas bankers in general are overly optimistic about future stock market developments. We show that these characteristics are of particular relevance and statistically significant during economic recessions and stock market downturns. Whilst investment bankers have always shown a tendency towards being optimistic, other affiliations are increasingly following their footsteps and most dominantly so for short-term forecasts. Especially during the most recent crises, their expectations of fast rebounds remained largely unsatisfied, questioning the applicability of economists' forecasts as we move forward.

Keywords: Livingston survey, return prediction, academics, bankers, fed

JEL Classification: G11, C52, C82

Suggested Citation

Veress, Aron and Kaiser, Lars, Forecasting Quality of Professionals: Does Affiliation Matter? (January 19, 2016). Quarterly Review of Economics and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2718218 or http://dx.doi.org/10.2139/ssrn.2718218

Aron Veress

University of Liechtenstein ( email )

Fürst-Franz-Josef-Strasse
Vaduz, 9490
Liechtenstein
+423 265 1178 (Phone)
+423 265 1112 (Fax)

HOME PAGE: http://www.uni.li/

Lars Kaiser (Contact Author)

University of Liechtenstein ( email )

Fürst Franz Josef Strasse
Vaduz, 9490
Liechtenstein
+423 265 1186 (Phone)

HOME PAGE: http://www.uni.li/lars.kaiser

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