Models of Inflation Expectations Formation: A Comparison of Household and Economist Forecasts

THE RECENT APPRECIATION of the critical role played by expectations of inflation in the behavior of macromodels has stimulated empirical studies of the formation of expectations by different groups. Time series survey data on expectations of inflation exist now for economists, households, and businesses. These data have been used as independent variables in explaining wage behavior (Gordon [16], Turnovsky and Wachter [34], and de Menil and...