Inflation and output growth uncertainty in individual survey expectations

Maritta Paloviita () and Matti Viren ()

Empirica, 2014, vol. 41, issue 1, 69-81

Abstract: This paper studies uncertainty using the ECB Survey of Professional Forecasters’ data. Both inflation and real GDP growth forecasts at the micro level are considered. Our analysis indicates that individual inflation uncertainty is closely related to output growth uncertainty. Individual forecasters seem to behave according to an uncertainty-augmented hybrid specification of the New Keynesian Phillips curve. We also find evidence that inflation uncertainty has a negative impact on economic activity by lowering output growth, boosting inflation and reducing the price-sensitiveness of aggregate supply. Copyright Springer Science+Business Media New York 2014

Keywords: Forecasting; Survey data; Expectations; Phillips curve; C53; E37; E31 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s10663-013-9225-z

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