Are U.K. Inflation Expectations Rational?
Bank of England Working Paper No. 81
39 Pages Posted: 24 Aug 1998
Date Written: 1998
Abstract
This paper tests for unbiasedness in inflation expectations drawn from a survey of U.K. employees by Gallup. It focuses on the econometric difficulties presented by having a small sample, there being overlapping forecast horizons, and by trying to make inference when the data appear to be non-stationary. Applying a method of inference suggested by Inder (1993) the paper concludes that measured expectations systematically overstate inflation. The paper checks the robustness of this result by looking at alternative survey data and by using alternative techniques for modelling the long run.
JEL Classification: E31
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Monetary Policy Transmission Mechanism in Poland - What Do We Know in 2011?
By Tomasz Lyziak, Oksana Demchuk, ...
-
Consumer Inflation Expectations: Survey Questions and Quantification Methods - the Case of Poland
By Ewa Stanislawska and Tomasz Lyziak
-
Nonparametric Hybrid Phillips Curves Based on Subjective Expectations: Estimates for the Euro Area
-
ECB Reaction Functions and the Crisis of 2008
By Stefan Gerlach and John Lewis
-
Testing Rationality of Price Expectations on the Basis of Contingency Tables