TY  - GEN
UR  - https://archiv.ub.uni-heidelberg.de/volltextserver/31616/
Y1  - 2022/04//
A1  - Lustenhouwer, Joep
A1  - Salle, Isabelle
AV  - public
EP  - 78
TI  - Forecast revisions in the presence of news: a lab investigation
N2  - We conduct a laboratory experiment in a fully-fledged  macroeconomic model where participants receive information about future government spending shocks and are tasked with repeatedly forecasting output over a given horizon. By eliciting several-period-head predictions, we investigate forecast reaction to news and revision. The lab forecasts are consistent with stylized facts on reaction to news established in the survey literature. We find that subjects steadily learn the magnitude of the effect of the shocks on output, albeit not to full extent. We further find little support for fully backward-looking expectations. We rationalize the experimental data in the context of a Bayesian updating model, which provides a better description of the behaviors in longer-horizon environments and among more attentive and experienced subjects.
ID  - heidok31616
T3  - Discussion Paper Series / University of Heidelberg, Department of Economics
CY  - Heidelberg
ER  -