Heterogeneous Beliefs and the Phillips Curve

Roland Meeks and Francesca Monti

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Heterogeneous beliefs modify the New Keynesian Phillips curve by introducing a term in the cross-section distribution of expectations. We develop a novel functional data approach to estimation and inference in survey-based Phillips curves that accounts for variation in distributions of expectations, generalizing standard approaches. Our findings demonstrate the statistical and economic importance of heterogeneous beliefs for inflation dynamics, especially during periods of macroeconomic disruption.Our findings hold in similar form across two major economies.

Keywords: Inflation dynamics; New Keynesian Phillips curve; Survey expectations; Functional principal Components; Functional regression (search for similar items in EconPapers)
JEL-codes: C4 C55 D84 E31 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2022-09
New Economics Papers: this item is included in nep-ecm and nep-mon
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Citations: View citations in EconPapers (4)

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https://cama.crawford.anu.edu.au/sites/default/fil ... 2022_meeks_monti.pdf (application/pdf)

Related works:
Journal Article: Heterogeneous beliefs and the Phillips curve (2023)
Working Paper: Heterogeneous beliefs and the Phillips curve (2022)
Working Paper: Heterogeneous beliefs and the Phillips curve (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2022-51

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