Inflation expectations, disagreement, and monetary policy

Mathias Hoffmann () and Patrick Hürtgen

Economics Letters, 2016, vol. 146, issue C, 59-63

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
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Inflation expectations, disagreement, and monetary policy (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:146:y:2016:i:c:p:59-63

DOI: 10.1016/j.econlet.2016.07.011

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