Are people's inflation forecasts rational? To investigate this question, go to the website of the Federal Reserve

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Are people's inflation forecasts rational? To investigate this question, go to the website of the Federal Reserve Bank of Philadelphia at www.philadelphiafed.org. Find the webpages for Research and Data and look for data from the Survey of Professional Forecasters on forecasts of CPI inflation. Then, go to FRED and get actual data on the CPI. Make a plot showing the forecast of inflation at a given date on the horizontal axis against the actual inflation rate on the vertical axis. If forecasts are rational, what pattern should you see in the data? What pattern do you observe in your plot? Does the evidence support the idea that people's inflation forecasts are rational?

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Macroeconomics

ISBN: 9780137876037

11th Edition

Authors: Andrew B Abel

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