TY  - JOUR
AU  - Mankiw, N. Gregory
AU  - Reis, Ricardo
AU  - Wolfers, Justin
TI  - Disagreement about Inflation Expectations
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9796
PY  - 2003
Y2  - June 2003
DO  - 10.3386/w9796
UR  - http://www.nber.org/papers/w9796
L1  - http://www.nber.org/papers/w9796.pdf
N1  - Author contact info:
N. Gregory Mankiw
Department of Economics
Littauer 223
Harvard University
Cambridge, MA  02138
Tel: 617/495-4301
Fax: 617/495-7730
E-Mail: ngmankiw@fas.harvard.edu

Ricardo Reis
Department of Economics
London School of Economics
Houghton Street
London WC1 2AE
United Kingdom
Tel: +44-20-7955-7508
E-Mail: r.a.reis@lse.ac.uk

Justin Wolfers
Department of Economics
University of Michigan
611 Tappan St
Lorch Hall #319
Ann Arbor, MI 48104
Tel: 734-764-2447
E-Mail: jwolfers@umich.edu
M1  - published as N. Gregory Mankiw, Ricardo Reis, Justin Wolfers. "Disagreement about Inflation Expectations," in Mark Gertler and Kenneth Rogoff, editors, "NBER Macroeconomics Annual 2003, Volume 18" The MIT Press (2004)

AB  - Analyzing 50 years of inflation expectations data from several sources, we document substantial disagreement among both consumers and professional economists about expected future inflation. Moreover, this disagreement shows substantial variation through time, moving with inflation, the absolute value of the change in inflation, and relative price variability. We argue that a satisfactory model of economic dynamics must speak to these important business cycle moments. Noting that most macroeconomic models do not endogenously generate disagreement, we show that a simple  sticky-information' model broadly matches many of these facts. Moreover, the sticky-information model is consistent with other observed departures of inflation expectations from full rationality, including autocorrelated forecast errors and insufficient sensitivity to recent macroeconomic news.
ER  -