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Mr. Olivier Coibion and Mr. Yuriy Gorodnichenko

expectations formation process, yielding radically different results for macroeconomic dynamics and policy implications. Recent work on rational expectations models with information frictions such as Mankiw and Reis (2002) , Woodford (2001) , and Sims (2003) has emphasized how information rigidities can account for otherwise puzzling empirical findings but these same frictions can also lead to policy prescriptions that differ from those under models with full information. 2 Despite a growing body of work studying the implications of possible departures from full

Mr. Olivier Coibion and Mr. Yuriy Gorodnichenko
We propose a new approach to test the full-information rational expectations hypothesis which can identify whether rejections of the arise from information rigidities. This approach quantifies the economic significance of departures from the and the underlying degree of information rigidity. Applying this approach to U.S. and international data of professional forecasters and other agents yields pervasive evidence consistent with the presence of information rigidities. These results therefore provide a set of stylized facts which can be used to calibrate imperfect information models. Finally, we document evidence of state-dependence in the expectations formation process.
Jonas Dovern, Mr. Ulrich Fritsche, Mr. Prakash Loungani, and Ms. Natalia T. Tamirisa
We study forecasts for real GDP growth using a large panel of individual forecasts from 36 advanced and emerging economies during 1989–2010. We show that the degree of information rigidity in average forecasts is substantially higher than that in individual forecasts. Individual level forecasts are updated quite frequently, a behavior more in line “noisy” information models (Woodford, 2002; Sims, 2003) than with the assumptions of the sticky information model (Mankiw and Reis, 2002). While there are cross-country variations in information rigidity, there is no systematic difference between advanced and emerging economies.
Ms. Natalia T. Tamirisa, Mr. Prakash Loungani, and Mr. Herman O. Stekler

into growth forecasts. And the wide country coverage allows us to look at differences in information rigidities between advanced and emerging market groups, and at linkages between forecast revisions in advanced countries and emerging market economies. Our main findings are as follows. First, there is considerable sluggishness in revisions of growth forecasts. This is consistent with the sticky information models of Mankiw and Reis (2002) , the imperfect information models of Woodford (2002) and Sims (2003) , and behavioral explanations for forecast smoothing

Jonas Dovern, Mr. Ulrich Fritsche, Mr. Prakash Loungani, and Ms. Natalia T. Tamirisa
We examine the behavior of forecasts for real GDP growth using a large panel of individual forecasts from 30 advanced and emerging economies during 1989–2010. Our main findings are as follows. First, our evidence does not support the validity of the sticky information model (Mankiw and Reis, 2002) for describing the dynamics of professional growth forecasts. Instead, the empirical evidence is more in line with implications of "noisy" information models (Woodford, 2002; Sims, 2003). Second, we find that information rigidities are more pronounced in emerging economies than advanced economies. Third, there is evidence of nonlinearities in forecast smoothing. It is less pronounced in the tails of the distribution of individual forecast revisions than in the central part of the distribution.