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Uncertainty And Disagreement In Inflation Forecasting

Author

Listed:
  • Boris Radovanov

    (Faculty of Economics Subotica - Serbia)

  • Aleksandra Marcikic

    (Faculty of Economics Subotica - Serbia)

Abstract

This paper tries to explain how the new adopted strategy of inflation targeting can help in improvement of inflation forecasting accuracy comparing with the price maker’s and consumer’s inflation expectations. For the further analysis authors use well known univariate time series models and structural models. However, the same model can produce the opposite results according to the methodology of involved inflation indicator. Therefore, this paper uses compared analysis for two separated inflation indicators, the core inflation and the consumer price index, emphasizing the differences in methodology and forecasting accuracy. Thus, the final goal is to test forecast efficiency by decreasing the errors between inflation expectations and real inflation values.

Suggested Citation

  • Boris Radovanov & Aleksandra Marcikic, 2011. "Uncertainty And Disagreement In Inflation Forecasting," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 20(1), pages 3-18, june.
    • Handle: RePEc:avo:emipdu:v:20:y:2011:i:1:p:3-18
    as

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    File URL: https://hrcak.srce.hr/clanak/103888
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    References listed on IDEAS

    as
    1. Carlos Capistr¡N & Allan Timmermann, 2009. "Disagreement and Biases in Inflation Expectations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(2-3), pages 365-396, March.
    2. Lahiri, Kajal & Sheng, Xuguang, 2008. "Evolution of forecast disagreement in a Bayesian learning model," Journal of Econometrics, Elsevier, vol. 144(2), pages 325-340, June.
    3. Branch, William A., 2007. "Sticky information and model uncertainty in survey data on inflation expectations," Journal of Economic Dynamics and Control, Elsevier, vol. 31(1), pages 245-276, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    uncertainty; disagreement; inflation forecasting;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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