Inflation expectations, disagreement, and monetary policy

Mathias Hoffmann and Patrick Hürtgen

No 31/2016, Discussion Papers from Deutsche Bundesbank

Abstract: Survey data on inflation expectations show that: (i) private sector forecasts and central bank forecasts are not fully aligned and (ii) private sector forecasters disagree about inflation expectations. To reconcile these two facts we introduce dispersed information in a New Keynesian model, where as a result, inflation expectations differ between the private sector and the central bank. We show that output and inflation responses change markedly when the central bank responds to private sector inflation expectations rather than to their own.

Keywords: business cycles; survey data; learning; disagreement; monetary policy (search for similar items in EconPapers)
JEL-codes: D83 E31 E52 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (3)

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Journal Article: Inflation expectations, disagreement, and monetary policy (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:312016

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