Now showing 1 - 4 of 4
  • Publication
    Online Interactions, Trade And The Gravity Model
    (University College Dublin. School of Economics, 2023-08) ;
    We evaluate the drivers of online interactions and the importance of these interactions for international trade patterns. To this end, we measure the volume of online interactions between countries using a unique individual level data set with over 25 million multiplayer games played between December 2019 and August 2022 in the game Age of Empires II: Definitive Edition. We first show that, in line with the gravity model, distance is a crucial factor in determining the pattern of online interactions when trade costs are low or non-existent. This suggests that the distance effect in this environment captures additional factors such as cultural proximity. Subsequently, we use this interaction data as a new measure of cultural proximity and apply it to bilateral goods trade. We find that our measure is highly significant and reduces the importance of gravity variables, particularly the distance coefficient by around 10 %. It is also more important for diversified goods than homogeneous goods.
  • Publication
    Do Professional Forecasters Believe in Uncovered Interest Rate Parity?
    (University College Dublin. School of Economics, 2023-11) ;
    No, not according to our data. Using a unique data set, we run panel regressions to test whether professional forecasters believe in uncovered interest rate parity (UIP). Specifically, we test whether the interest rate expectations for individual forecasters are in line with their exchange rate expectations using the UIP condition. This new approach allows us to test directly whether forecasters believe in UIP. We find that professional forecasters generally do not believe in UIP across a range of currencies and horizons. Given the prevalence of the UIP condition in our international macro models, these results reiterate the importance of finding the drivers for these deviations.
  • Publication
    Temporal Consistency of Forecasts and Data Releases
    (University College Dublin. School of Economics, 2022-02-11) ;
    We provide key insights on expectation formation based on the Bloomberg eco- nomic survey: around two thirds of professional forecasters provide GDP forecasts that are temporally consistent, meaning that quarterly forecasts add up to the annual. Temporally consistent forecasts are not more accurate than the inconsistent ones, but inconsistent ones might drive estimates of information frictions in some cases. For the overwhelming majority of consistent forecasts, annual GDP predictions almost imme- diately reflect the monthly GDP releases. These findings suggest that most forecasters make at least minor forecast updates after each data release. Indeed, the inattention rate is found to be between 3% and 6% at the quarterly frequency.
  • Publication
    Oil Prices and Inflation Forecasts
    (University College Dublin. School of Economics, 2023-11) ; ;
    We examine how people’s forecasts for oil or gasoline prices influence their forecasts for broader inflation. We find little evidence from two US household surveys that people over-react to their beliefs about gasoline prices when formulating their forecasts about inflation, with much of theevidence pointing towards under-reaction. We also show that the participants in the ECB’s Survey of Professional Forecasters and the Wall Street Journal survey of economists appear to place too little weight on their subjective forecasts for oil prices when making their forecasts for total inflation.