Do corporate executives have accurate predictions for the economy? A directional analysis

Yoichi Tsuchiya

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

Abstract

Although many studies on the directional accuracy of forecasts by international organizations and professional forecasters have been scrutinized, little attention has been paid to forecasts by business leaders. In order to address this gap, we use directional tests to investigate whether forecasts of Gross Domestic Product by corporate executives are valuable to their users. Our findings indicate that all the forecasts with forecast horizons from 1 to 14. months are valuable, whereas established literature indicates that longer-term forecasts tend not to be valuable. This suggests that corporate executives are concerned with and focus on longer-term economic environments and can therefore serve as an important resource for policymakers. However, some of the useful forecasts with real-time data, in particular those in the Tankan survey, are not useful with historical data.

Original languageEnglish
Pages (from-to)167-174
Number of pages8
JournalEconomic Modelling
Volume30
Issue number1
DOIs
Publication statusPublished - 2013 Jan
Externally publishedYes

Keywords

  • Business survey
  • Directional analysis
  • Forecast accuracy
  • Forecast evaluation
  • Macroeconomic forecast

ASJC Scopus subject areas

  • Economics and Econometrics

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