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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.

Suggested Citation

  • Paul Hubert, 2013. "FOMC forecasts as a focal point for private expectations," Documents de Travail de l'OFCE 2013-12, Observatoire Francais des Conjonctures Economiques (OFCE).
  • Handle: RePEc:fce:doctra:1312
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Masazumi Hattori & Steven Kong & Frank Packer & Toshitaka Sekine, 2016. "The effects of a central bank's inflation forecasts on private sector forecasts: Recent evidence from Japan," BIS Working Papers 585, Bank for International Settlements.
    2. Ahrens, Steffen & Lustenhouwer, Joep & Tettamanzi, Michele, 2017. "The Stabilizing Role of Forward Guidance: A Macro Experiment," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168063, Verein für Socialpolitik / German Economic Association.
    3. repec:spo:wpmain:info:hdl:2441/3pot7260lh88lrfhrhvs85lh2f is not listed on IDEAS
    4. Paul Hubert, 2015. "Revisiting the Greenbook’s relative forecasting performance," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 151-179.
    5. Paul Hubert & Becky Maule, 2016. "Policy and Macro Signals as Inputs to Inflation Expectation Formation," Documents de Travail de l'OFCE 2016-02, Observatoire Francais des Conjonctures Economiques (OFCE).
    6. repec:bpj:bejmac:v:17:y:2017:i:1:p:41:n:7 is not listed on IDEAS
    7. Paul Hubert, 2014. "Disentangling qualitative and quantitative central bank influence," Sciences Po publications 2014-23, Sciences Po.
    8. Knüppel, Malte & Vladu, Andreea L., 2016. "Approximating fixed-horizon forecasts using fixed-event forecasts," Discussion Papers 28/2016, Deutsche Bundesbank.

    More about this item

    Keywords

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

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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