Biased forecasts and voting

We introduce macroeconomic forecasters as strategic agents who may bias their reports to influence their audience. We test the motives of forecasters using monthly forecaster‐level data around the Brexit referendum. To guide our analysis, we model the way in which a referendum voter forms expectations based on the reports of a politically motivated forecaster. The forecaster trades off its reputation for honesty against the opportunity to influence the vote. The model predicts that the forecaster lies selectively and continues to do so even after the referendum. Our analysis finds that forecasters exposed to financial losses from Brexit issued significantly less accurate GDP growth forecasts than others. The findings suggest that influential forecasters may strategically manipulate information when the stakes are high.