SUERF Policy Brief Learning to Forecast the Hard Way—Evidence from German Reunification

Recently, it seems, `occasionally' has become `often': 2016 brought the Brexit referendum, 2018 the US-China Trade War, 2020 the COVID19 pandemic, 2022 the Russian invasion of Ukraine, and the end of a long low-inflation environment, which according to The Economist “is playing havoc with [Amazon's] ability to predict the future”. [...] The unique microdata from a German firm survey, the ifo Business Climate Survey (Geschäftsklimaindex), allows us to quantify how fast East German firms learn to forecast business conditions under the quasi-experiment of German Reunification. [...] Finally, though, the longer one lives in the new location, the better one understands the weather patterns and aggregate information from various sources. [...] He is a German Chancellor’s Scholar, a Fellow of the Alexander von Humboldt Foundation, and winner of the National Science Foundation’s Graduate Research Fellowship, the Fulbright Fellowship, and the Bosch Future Leaders of America Fellowship. [...] The views expressed are those of the authors and not necessarily those of the institutions the authors are affiliated with.