Are entrepreneurs' forecasts of economic indicators biased?

Cees Gorter, Peter Nijkamp, Eric Pels, Sytze Rienstra
2001 Entrepreneurship and Regional Development  
Insight into the investment behaviour of ® rms is central in understanding economic dynamics. A critical question, however, is whether ® rms provide suae ciently reliable data to enable them to make plausible forecasts at the meso (regional or sectoral) level. This paper analyses Dutch investment forecasts at diå erent levels of aggregation. The central research question is whether entrepreneurs, individually or as a group, make systematic errors in their investment forecasts. A statistical
more » ... reveals that investment forecasts are not biased at the aggregated (regional and sectoral) level. At the micro level, however, there is a signi® cant bias. Hence, using aggregated (regional and sectoral) data to test the lack of bias (unbiasedness) of forecasts may lead to the wrong conclusions. Moreover, aggregated investment forecasts may then be an inappropriate source for policy recommendations, despite their seemingly high reliability. This ® nding may in principle be valid for many European countries, since data collection on investment is organized in similar ways throughout Europe.
doi:10.1080/08985620010004098 fatcat:khy7wse3dnbgbfw2drej5snyma