Disagreement about Inflation Expectations

N. Gregory Mankiw, Ricardo Reis and Justin Wolfers

No 9796, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D8 E3 (search for similar items in EconPapers)
Date: 2003-06
New Economics Papers: this item is included in nep-mac
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (543)

Published as Disagreement about Inflation Expectations , N. Gregory Mankiw, Ricardo Reis, Justin Wolfers. in NBER Macroeconomics Annual 2003, Volume 18 , Gertler and Rogoff. 2004

Downloads: (external link)
http://www.nber.org/papers/w9796.pdf (application/pdf)

Related works:
Chapter: Disagreement about Inflation Expectations (2004)
Working Paper: Disagreement about Inflation Expectations (2004)
Working Paper: Disagreement about Inflation Expectations (2003)
Working Paper: Disagreement about Inflation Expectations (2003)
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:nbr:nberwo:9796

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w9796

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().