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FOMC forecasts as a focal point for private expectations

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  • Paul Hubert

    (Ofce sciences-po)

Abstract

We explore empirically the theoretical prediction that public information acts as a focal point in the context of the US monetary policy. We aim at establishing whether the publication of FOMC inflation forecasts affects the cross-sectional dispersion of private inflation expectations. Our main finding is that publishing FOMC inflation forecasts has a negative effect on the cross-sectional dispersion of private current-year inflation forecasts. This effect is found to be robust to another survey dataset and to various macroeconomic controls. Moreover, we find that the dispersion of private inflation forecasts is not affected by the dispersion of views among FOMC members.

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Bibliographic Info

Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2013-12.

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Date of creation: Jul 2013
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Handle: RePEc:fce:doctra:1312

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Keywords: monetary policy; central bank communication; public information; survey expectations; dispersion;

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