Forecasting Quality of Professionals: Does Affiliation Matter?
25 Pages Posted: 20 Jan 2016 Last revised: 24 Jan 2017
Date Written: January 19, 2016
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: Suggested Citation