Inflation Expectations and the Two Forms of Inattentiveness

Joshy Easaw () and Roberto Golinelli
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Joshy Easaw: Cardiff Business School, http://business.cardiff.ac.uk/people/staff/joshy-easaw

No E2014/21, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: The purpose of the present paper is to investigate the structure and dynamics of professionals' forecast of inflation. Recent papers have focused on their forecast errors and how they may be affected by informational rigidities, or inattentiveness. In this paper we extend the existing literature by considering a second form of inattentiveness. While showing that both types of inattentiveness are closely related, we focus on the inattentiveness that forecasters face when undertaking multi-period forecast and, thereby, the expected momentum of inflation. Using number survey-based data for the US and UK, we establish a new structure for the professional's forecast error with direct implications for the persistence of real effects

Keywords: Expectations; Information Rigidity; Survey Forecasts (search for similar items in EconPapers)
JEL-codes: E3 E4 E5 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2014-10
New Economics Papers: this item is included in nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2014/21

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