EconPapers    
Economics at your fingertips  
 

Disagreement about Inflation Expectations

N. Gregory Mankiw (), Ricardo Reis and Justin Wolfers ()

Research Papers from Stanford University, Graduate School of Business

Abstract: Analyzing 50 years of inflation expectations data from several sources, we document substantial disagreement among both consumers and professional economists about expected future inflation. Moreover, this disagreement shows substantial variation through time, moving with inflation, the absolute value of the change in inflation, and relative price variability. We argue that a satisfactory model of economic dynamics must speak to these important business cycle moments. Noting that most macroeconomic models do not endogenously generate disagreement, we show that a simple "sticky-information" model broadly matches many of these facts. Moreover, the sticky-information model is consistent with other observed departures of inflation expectations from full rationality, including autocorrelated forecast errors and insufficient sensitivity to recent macroeconomic news.

Date: 2003-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (214) Track citations by RSS feed

Downloads: (external link)
http://gsbapps.stanford.edu/researchpapers/library/RP1807.pdf

Related works:
Chapter: Disagreement about Inflation Expectations (2004) Downloads
Working Paper: Disagreement about Inflation Expectations (2004) Downloads
Working Paper: Disagreement about Inflation Expectations (2003) Downloads
Working Paper: Disagreement about Inflation Expectations (2003) Downloads
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:ecl:stabus:1807

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2019-05-22
Handle: RePEc:ecl:stabus:1807