Forecast accuracy and product differentiation of Japanese Institutional Forecasters

This paper investigates whether some forecasters consistently outperform others using real GDP forecast data of 53 Japanese institutions over the past 24 years. It finds that the accuracy rankings are not significantly different from those that might be expected if all institutions had equal forecasting ability. On the other hand, their rankings of the relative forecast levels are significantly different from a random one. These results suggest that the macroeconomic forecasting business is competitive and each institution chooses the degree of “product differentiation” of its forecast so that accuracy and publicity are optimally balanced.