Informational differences, adaptive learning, and inflation forecast bias

This work highlights a previously overlooked factor that contributes to bias in private inflation forecasts—ignorance of confidential monetary rules. Additionally, it examines how this ignorance indirectly affects policy rate settings. The model proposed reconciles biases in two key forecast sources: the inflation expectations from the Survey of Professional Forecasters and the Federal Reserve's Greenbook forecasts for the output gap. Moreover, the model investigates the impact of informational differences on monetary policy transmission and identifies clear conditions under which inflation rises following a contractionary monetary policy shock.

• Publication year

  2024

• Venue

  International Studies of Economics

• Publication date

  2024-12-16

• Fields of study

  Not labeled

• Identifiers
  DOI 10.1002/ise3.105
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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