Rounding behaviour of professional macro-forecasters

Clements, M. P. ORCID: https://orcid.org/0000-0001-6329-1341 (2021) Rounding behaviour of professional macro-forecasters. International Journal of Forecasting, 37 (4). pp. 1614-1631. ISSN 0169-2070 doi: 10.1016/j.ijforecast.2021.03.003

Abstract/Summary

The rounding of point forecasts of CPI inflation and the unemployment rate by U.S.Professional Forecasters is modest. There is little evidence that forecasts are rounded to a greater extent in response to higher perceived uncertainty about future outcomes. There is clear evidence that probability of decline forecasts are rounded: over a half of the forecast probabilities of decline in the current quarter are multiples of 10. We found that rounding of these probabilities is correlated with worse accuracy, but are cognizant that worse (less accurate) forecasters might round more, rather than the degree of rounding per se worsening accuracy. By simulating the loss from rounding for a set of efficient forecasters, we show that the explanation that respondents round otherwise efficient forecasts is untenable, and that the contribution of rounding is of minor importance.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/96764
Identification Number/DOI	10.1016/j.ijforecast.2021.03.003
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Publisher	Elsevier
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