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Inflation expectations in the euro area: are consumers rational?

  • Francisco Dias
  • Cláudia Duarte
  • António Rua

    ()

In this paper, we propose a quantitative measure for inflation expectations based on consumer survey data. Thereafter, we proceed to testing the rationality assumption. This issue is of noteworthy interest in its own as it is commonly assumed in the theoretical modelling literature that the rational expectations hypothesis holds. This analysis is conducted for the euro area as a whole, as well as for several member countries, using a sample covering the last two decades. Moreover, we also assess if the conclusions hold when one focuses on the post-euro introduction period.

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File URL: http://hdl.handle.net/10.1007/s10290-010-0058-6
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Article provided by Springer in its journal Review of World Economics.

Volume (Year): 146 (2010)
Issue (Month): 3 (September)
Pages: 591-607

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Handle: RePEc:spr:weltar:v:146:y:2010:i:3:p:591-607
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