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 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
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Bibliographic InfoPaper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 477.
Date of creation: Jul 2002
Date of revision:
Other versions of this item:
- Christopher D. Carroll, 2003. "Macroeconomic Expectations Of Households And Professional Forecasters," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 269-298, February.
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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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