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Inflation forecasts: how good are they?

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Author Info

  • Dean Croushore

Abstract

Forecasts of inflation affect decision-making in many segments of the economy. But in the early 1980s, economists found that forecasts in surveys taken over the past 20 years systematically underpredicted inflation. As a result, many economists stopped paying attention to forecasts. However, they may have abandoned them too quickly. In this article, Dean Croushore takes a closer look at survey forecasts and, after considering some relevant factors, concludes that inflation forecasts may not be as bad as you think

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Bibliographic Info

Article provided by Federal Reserve Bank of Philadelphia in its journal Business Review.

Volume (Year): (1996)
Issue (Month): May ()
Pages: 15-25

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Handle: RePEc:fip:fedpbr:y:1996:i:may:p:15-25

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Keywords: Forecasting ; Inflation (Finance);

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Cited by:
  1. Dean Croushore, 1998. "Low inflation: the surprise of the 1990s," Business Review, Federal Reserve Bank of Philadelphia, issue Jul, pages 3-12.
  2. Richard Clarida & Jordi Galí & Mark Gertler, 2000. "Monetary Policy Rules And Macroeconomic Stability: Evidence And Some Theory," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 147-180, February.
  3. Austin Murphy & Anandi Sahu, 2001. "Empirical evidence of a positive inflation premium being incorporated into stock prices," Atlantic Economic Journal, International Atlantic Economic Society, vol. 29(2), pages 177-185, June.
  4. Michael Berlemann & Forrest Nelson, 2005. "Forecasting Inflation via Experimental Stock Markets Some Results from Pilot Markets," Ifo Working Paper Series Ifo Working Papers No. 10, Ifo Institute for Economic Research at the University of Munich.
  5. Laurence Ball & Dean Croushore, 1995. "Expectations and the Effects of Monetary Policy," NBER Working Papers 5344, National Bureau of Economic Research, Inc.
  6. Olivier Armantier & Wändi Bruine de Bruin & Giorgio Topa & Wilbert van der Klaauw & Basit Zafar, 2011. "Inflation expectations and behavior: Do survey respondents act on their beliefs?," Staff Reports 509, Federal Reserve Bank of New York.
  7. Lloyd B. Thomas, 1999. "Survey Measures of Expected U.S. Inflation," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 125-144, Fall.
  8. Tom Stark, 1997. "Macroeconomic forecasts and microeconomic forecasters in the Survey of Professional Forecasters," Working Papers 97-10, Federal Reserve Bank of Philadelphia.
  9. Silverio Foresi & Alessandro Penati & George Pennacchi, 1997. "Estimating the cost of U.S. indexed bonds," Working Paper 9701, Federal Reserve Bank of Cleveland.
  10. Grant, Alan P. & Thomas, Lloyd B., 2001. "Supply shocks and the rationality of inflation forecasts," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(4), pages 515-532.
  11. David Laster & Paul Bennett & In Sun Geoum, 1997. "Rational bias in macroeconomic forecasts," Staff Reports 21, Federal Reserve Bank of New York.
  12. Dean Croushore, 1997. "The Livingston Survey: still useful after all these years," Business Review, Federal Reserve Bank of Philadelphia, issue Mar, pages 15-27.
  13. Berlemann, Michael, 2001. "Forecasting inflation via electronic markets: Results from a prototype market," Dresden Discussion Paper Series in Economics 06/01, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  14. Dean Croushore, 1999. "How useful are forecasts of corporate profits?," Business Review, Federal Reserve Bank of Philadelphia, issue Sep, pages 3-12.

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