Abstract
AbstractThis study evaluates whether smoothing (positive correlation in subsequent revisions) in USDA corn, soybean, and wheat production forecasts is likely to result in misallocation of economic resources. Smoothing, like any other type of forecast inefficiency, implies that some of the information in these forecasts is predictable. Based on the evidence of smoothing, we decomposed market surprise and forecast revision into predictable and unpredictable components. Our results show that futures markets tended to react only to the unpredictable component, therefore indicating that market participants were aware of smoothing and adjusted for it in forming their price expectations.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.