CPI forecasts of Japanese economists

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This research project evaluates the rationality of 42 Japanese forecasters using monthly consumer price index(CPI) forecasts. It finds that 86% of zero-month forecasts are inferior to the "same-as-the-last-month" forecast, and that most forecasters fail to utilize the latest realization of CPI. Furthermore, the same tendency was observed in one-month forecasts and two-month forecasts : almost all forecasts are irrational in the sense that their forecast errors could be reduced using the latest realization of CPI at the time the forecasts were made. The forecast error of the consensus forecast is smaller than that of a typical forecaster, but it could be reduced using the latest realization of CPI.