The Dynamics of Expectations. A Look on Forecasting as a Sequence.

Summary The paper claims forecasting is a process during which forecasts are regularly updates and revised. Paying attention to the dynamics of expectations provides the opportunity to study changes in expectations formed by professionals, and thus give insights into how their labor unfolds. Drawing upon data from a purposely-built database of forecasts running from Sep-tember 2006 to September 2017, linear and logistic regression models investigate the infor-mational and organizational grounds of forecasts revisions. It it suggests that similar forecasts form a consistent sequence, so that revisions mostly consist in the adjustments of ‘old’ fore-casts with respect to newly available information. By and large, forecasting means updating former forecasts. Besides, data shows the core activity of forecasting organizations, and in turn their audience, matter to understand the extent to which they revise their forecasts: de-spite what forecasters claim in interviews, public institutions, among which the IMF or the OECD, tend to revise their forecasts on a wider scale than private banks or insurance com-panies. Eventually, scrutinizing how forecasts revisions distribute according to the years dur-ing which they are produced, stress that during major economic crises, such as the Great Recession, forecasters not only revise their former expectations downward but also upward. This hints at a Durkheim-inspired interpretation of economic crises as re-opening the future.