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Volume 65, Issue 6


Do Central Bank Forecasts Matter for Professional Forecasters?

Kotlowski, Jacek

Year: 2015   Volume: 65   Issue: 6   Pages: 432-454

Abstract: This paper examines the extent to which the information provided by a central bank affects the forecasts formulated by professional forecasters. We empirically investigate whether the disclosure of GDP and inflation forecasts by the Narodowy Bank Polski reduces disagreement in professional forecasters’ expectations. The results only partially support the hypothesis existing in the literature on the coordinating role of the central bank. The main finding is that by publishing its projection of future GDP growth, the central bank reduces the dispersion of one-year-ahead GDP forecasts. Our study indicates that the role of the central bank in reducing the forecasts’ dispersion strengthens over time. Using non-linear models, we also find that the extent to which the projection release affects the dispersion of GDP forecasts varies over the business cycle. On the contrary, the release of CPI projections affects neither the cross-sectional dispersion nor the level of forecasts formulated by professional forecasters.

JEL classification: C24, E37, E52, E58

Keywords: monetary policy, inflation targeting, forecasting, central bank communication, forecast disagreement

RePEc: http://ideas.repec.org/a/fau/fauart/v65y2015i6p432-454.html

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