**Acknowledging Uncertainty in Economic Forecasting. Some Insight from Confidence and Industrial Trend Surveys**

## **Ana Jesús López-Menéndez \* and Rigoberto Pérez-Suárez**

Department of Applied Economics, University of Oviedo, Campus del Cristo s/n, 33006 Oviedo, Asturias, Spain; rigo@uniovi.es

**\*** Correspondence: anaj@uniovi.es; Tel.: +34-985103759

Received: 18 March 2019; Accepted: 12 April 2019; Published: 18 April 2019

**Abstract:** The role of uncertainty has become increasingly important in economic forecasting, due to both theoretical and empirical reasons. Although the traditional practice consisted of reporting point predictions without specifying the attached probabilities, uncertainty about the prospects deserves increasing attention, and recent literature has tried to quantify the level of uncertainty perceived by different economic agents, also examining its effects and determinants. In this context, the present paper aims to analyze the uncertainty in economic forecasting, paying attention to qualitative perceptions from confidence and industrial trend surveys and making use of the related ex-ante probabilities. With this objective, two entropy-based measures (Shannon's and quadratic entropy) are computed, providing significant evidence about the perceived level of uncertainty. Our empirical findings show that survey's respondents are able to distinguish between current and prospective uncertainty and between general and personal uncertainty. Furthermore, we find that uncertainty negatively affects economic growth.

**Keywords:** uncertainty; qualitative surveys; Shannon's entropy; quadratic entropy; VAR; impulse-response analysis
