Inflation Uncertainty from Firms’ Perspective, Overconfidence and Credibility of Monetary Policy

Fernando Borraz, Orlik Anna () and Zacheo Laura ()
Additional contact information
Orlik Anna: Federal Reserve Board, Washington, DC, USA
Zacheo Laura: 56724 Banco Central del Uruguay , Montevideo, Uruguay

The B.E. Journal of Macroeconomics, 2024, vol. 24, issue 2, 853-882

Abstract: This paper uses survey data to gauge firms’ inflation uncertainty. First, it shows how commonly used proxies of uncertainty, such as ex post squared forecast errors or forecast dispersion differ from measures of actual ex ante inflation uncertainty. Second, this paper documents novel stylized facts: firms’ uncertainty and overconfidence – low ex ante variances compared to ex post (squared) forecast errors – are shown to be relevant for how firms’ form their beliefs about inflation and their inflation forecasts accuracy (firms know what they do not know) and to impact firms’ beliefs about credibility of monetary policy.

Keywords: inflation expectations; inflation uncertainty; overconfidence; subjective probability distribution; monetary policy; central bank’s credibility (search for similar items in EconPapers)
JEL-codes: D84 E31 E58 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/bejm-2023-0161 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejmac:v:24:y:2024:i:2:p:853-882:n:1004

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/bejm/html

DOI: 10.1515/bejm-2023-0161

Access Statistics for this article

The B.E. Journal of Macroeconomics is currently edited by Arpad Abraham and Tiago Cavalcanti

More articles in The B.E. Journal of Macroeconomics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().