Heterogeneous beliefs and the Phillips curve

Roland Meeks and Francesca Monti

No 17537, CEPR Discussion Papers from Centre for Economic Policy Research

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: Survey expectations; Inflation dynamics; Functional regression; New keynesian phillips curve; functional principal components (search for similar items in EconPapers)
JEL-codes: C4 C55 D84 E31 (search for similar items in EconPapers)
Date: 2022-09
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Related works:
Working Paper: Heterogeneous beliefs and the Phillips curve (2025)
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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