Macroeconomics Seminar Series. "Lumpy Forecasts"
Published: 20 March 2025
22 May 2025. Dr Isaac Baley, Universitat Pompeu Fabra (UPF)
Dr Isaac Baley, Universitat Pompeu Fabra (UPF)
"Lumpy Forecasts"
Thursday, 22 May 2025. 15:00-16:30
Room 141A, Adam Smith Business School
Abstract
Professional forecasters adjust their inflation forecasts in a distinctly lumpy pattern, making infrequent but substantial revisions. Strategic concerns are relevant - forecasters are more likely to adjust, and by larger amounts, when their forecasts deviate from the consensus. Using a fixed-event forecasting framework, we document the impact of lumpiness and consensus pressure on forecast adjustments. Our model, which integrates Bayesian updating with revision costs and strategic concerns, replicates the observed lumpiness in survey data and sheds light on forecasters' apparent overreactions to new information. This framework enables us to "cleanse" forecasts, isolating the underlying inflation beliefs that drive these predictions.
Bio
Isaac Baley is an Associate Professor of Economics at Universitat Pompeu Fabra, an Associate Researcher at CREI, and an Affiliated Professor at the Barcelona School of Economics. He is also a Research Affiliate of CEPR. He earned a PhD in Economics from New York University and a Masters in Economic Theory from Instituto Tecnológico Autónomo de México.
Isaac's research aims to understand how agents behave in environments with microeconomic frictions and the implications of their choices for macroeconomic outcomes. His work spans various topics, including firms’ pricing and investment behavior, monetary policy, international trade, and labor markets.
Isaac’s work has been published in Econometrica, the Journal of Political Economy, The Review of Economic Studies, the Economic Journal, and other top journals. He has been awarded several competitive grants, including the Marie Curie Individual Fellowship and a Starting ERC Grant from the European Commission, the British Academy Visiting Fellowship, and the “La Caixa” Research Grant on Socioeconomic Wellbeing.
Isaac is the author of the book "The Data Economy: Tools and Applications", which he co-wrote with Laura Veldkamp and published by Princeton University Press in 2025. He was previously an economic advisor at the Mexican Ministries of Economics and Finance, where he designed and implemented policies to expand access to financial markets.
For further information, please contact business-seminar-series@glasgow.ac.uk.
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First published: 20 March 2025