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| Author: | Branch, W. |
| Title: | The theory of rationally heterogeneous expectations: evidence from survey data on inflation expectations |
| Journal: | Economic Journal
2004 : JUL, VOL. 114:497, p. 592-621 |
| Index terms: | Inflation Information economics |
| Language: | eng |
| Abstract: | This article develops a model of inflation expectation formation where agents form their inflation forecasts by selecting a predictor function from a set of alternatives whereby they may rationally choose a method other than the most accurate. The writer tests whether the survey data exhibits rationally heterogeneous expectations. It is shown that there is dynamic switching that depends on the relative mean squared errors of the predictors. |
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