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Inflation Dynamics: The Role of Expectations
Journal article   Peer reviewed

Inflation Dynamics: The Role of Expectations

Journal of Money, Credit and Banking, Vol.42(6), pp.1161-1172
2010

Abstract

inflation survey expectations Phillips curve.
This paper estimates the Phillips curve allowing for a simultaneous role of rational and survey expectations. We consider both a reduced form and a structural specification of the Phillips curve. The results suggest that survey expectations can be a statistically significant component of firms' expectations and inflation dynamics. However, rational expectations continue to play a dominant role.

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