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Central bank forecasts and private expectations: An empirical assessment from three emerging economies

Helder de Mendonça () and Joseph David Barroso Vasconcelos de Deus

Economic Modelling, 2019, vol. 83, issue C, 234-244

Abstract: As part of their monetary policy strategy, many central banks are attempting to manage private sector expectations about key macroeconomic variables. In this article, we investigate whether forecasts provided by central banks in three inflation targeting emerging economies (Brazil, Mexico, and Poland) affect the expectations of private forecasters. In particular, we analyze whether the disagreement between the central bank and private sector forecasts applies to explain changes in private sector expectations regarding inflation and economic growth. The findings show that while central bank forecasts are higher than those made by private sector forecasters, the result is an update upwards of private forecasts and that this effect is stronger for GDP growth forecasts than for inflation forecasts.

Keywords: Inflation and economic growth forecasts; Central bank and private sector; Expectations channel; Monetary policy (search for similar items in EconPapers)
JEL-codes: E58 E37 E52 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.econmod.2019.02.013

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