Macroeconomic Expectations Of Households And Professional Forecasters
AbstractEconomists have long emphasized the importance of expectations in determining macroeconomic outcomes. Yet there has been almost no recent effort to model actual empirical expectations data; instead, macroeconomists usually simply assume that expectations are "rational." This paper shows that while empirical household expectations are not rational in the usual sense, expectational dynamics are well captured by a model in which households' views derive from news reports of the views of professional forecasters, which in turn may be rational. The model's estimates imply that people only occasionally pay attention to news reports; this inattention generates "stickyness" in aggregate expectations, with important macroeconomic consequences. © 2001 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
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Bibliographic InfoArticle provided by MIT Press in its journal The Quarterly Journal of Economics.
Volume (Year): 118 (2003)
Issue (Month): 1 (February)
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Other versions of this item:
- Christopher D Carroll, 2002. "Macroeconomic Expectations of Households and Professional Forecasters," Economics Working Paper Archive 477, The Johns Hopkins University,Department of Economics.
- Christopher Carroll, 2003. "RATS code for Macroeconomic Expectations Of Households And Professional Forecasters," QM&RBC Codes 36, Quantitative Macroeconomics & Real Business Cycles.
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Bernanke: Inflation Expectations and Inflation Forecasting
by Mark Thoma in Economist's View on 2007-07-10 20:08:00
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