Horizon Bias in Expectations Formation

2021 ◽  
Author(s):  
Stefano Cassella ◽  
Benjamin Golez ◽  
Huseyin Gulen ◽  
Peter Kelly
Keyword(s):  
Expectations Formation

scholarly journals The Formation of Expectations, Inflation, and the Phillips Curve

2018 ◽  
Vol 56 (4) ◽  
pp. 1447-1491 ◽  
Author(s):  
Olivier Coibion ◽  
Yuriy Gorodnichenko ◽  
Rupal Kamdar
Keyword(s):  
Survey Data ◽  
Rational Expectations ◽  
Phillips Curve ◽  
Rational Expectation ◽  
New Keynesian ◽  
Inflation Expectations ◽  
Full Information ◽  
Macroeconomic Modeling ◽  
Expectations Formation

This paper argues for a careful (re)consideration of the expectations formation process and a more systematic inclusion of real-time expectations through survey data in macroeconomic analyses. While the rational expectations revolution has allowed for great leaps in macroeconomic modeling, the surveyed empirical microevidence appears increasingly at odds with the full-information rational expectation assumption. We explore models of expectation formation that can potentially explain why and how survey data deviate from full-information rational expectations. Using the New Keynesian Phillips curve as an extensive case study, we demonstrate how incorporating survey data on inflation expectations can address a number of otherwise puzzling shortcomings that arise under the assumption of full-information rational expectations. (JEL D04, E24, E27, E31, E37)

scholarly journals Consumer's inflation expectations in Brazil

2017 ◽  
Vol 47 (3) ◽  
pp. 509-529
Author(s):  
Fernando Ormonde Teixeira ◽  
Ingrid Christyne Luquett de Oliveira ◽  
Pedro Costa Ferreira
Keyword(s):  
Forecast Accuracy ◽  
Major Elements ◽  
Inflation Expectations ◽  
Consumer Survey ◽  
Micro Data ◽  
The Past ◽  
Expectations Formation ◽  
The Media ◽  
Main Components ◽  
Media Data

Abstract This paper investigates what are the main components of consumer's inflation expectations. We combine the FGV's Consumer Survey with the indices of inflation (IPCA and government regulated prices), professional forecasts disclosed in the Focus report, and media data which we crawl from one of the biggest and most important Brazilian newspapers, Folha de São Paulo, to determine what factors are responsible for and improve consumer's forecast accuracy. We found gender, age and city of residence as major elements when analyzing micro-data. Aggregate data shows the past inflation as an important trigger in the formation of consumers' expectations and professional forecasts as negligible. Moreover, the media plays a significant role, accounting not only for the expectations' formation but for a better understanding of actual inflation as well.

scholarly journals A Behavioral Macroeconomic Model of Exchange Rate Fluctuations with Complex Market Expectations Formation

2014 ◽  
Vol 45 (4) ◽  
pp. 669-691 ◽  
Author(s):  
Peter Flaschel ◽  
Florian Hartmann ◽  
Christopher Malikane ◽  
Christian R. Proaño
Keyword(s):  
Exchange Rate ◽  
Macroeconomic Model ◽  
Exchange Rate Fluctuations ◽  
Expectations Formation ◽  
Market Expectations

Human-Environmental Influences and Interactions in Shifting Agriculture When Farmers Form Expectations Rationally

1993 ◽  
Vol 25 (1) ◽  
pp. 121-136 ◽  
Author(s):  
D W Jones ◽  
R V O'Neill
Keyword(s):  
Interest Rates ◽  
Environmental Changes ◽  
Initial Period ◽  
Environmental Parameters ◽  
Land Rent ◽  
Fallow Period ◽  
Shifting Agriculture ◽  
Current Period ◽  
Expectations Formation ◽  
Future Value

This paper contains a study of the response of shifting agriculture to several social and environmental changes in circumstances in which farmers form in a relatively sophisticated manner their expectations of the future values of key economic variables. Farmers are ‘given’ a model of expectations formation in which the expected future value of variables interact in the same manner as in the current period. With this structure of expectations, the responses of the length of fallow period (the inverse of the percentage of available land cultivated in the initial period), the total area of land under cultivation and lying fallow in the initial period of a rotational cycle, and the initial-period wage rate and spatial structure of land rent to changes in several social and environmental parameters are examined. Several salient characteristics commonly attributed to shifting, or rotational, agriculture are replicated. Higher crop prices and increased population shorten fallow periods. Those same changes also increase the total area of land under shifting agriculture. Higher interest rates also shorten fallow periods. Fallows are longer at locations farther from central markets. Less commonly recognized is that social feedbacks operate to reduce pressure on more fragile land, although this does not imply that, other things being equal, fragile tropical land will not be ‘overused’ in an ecological sense.

Aggregate Expectations Formation

1985 ◽  
pp. 163-173
Author(s):  
K. Holden ◽  
D. A. Peel ◽  
J. L. Thompson
Keyword(s):  
Expectations Formation
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