{"title":"Asymmetric information and misaligned inflation expectations","authors":"Zhao Han","doi":"10.1016/j.jmoneco.2023.10.010","DOIUrl":null,"url":null,"abstract":"<div><p><span>Recent survey evidence reveals misaligned inflation expectations<span> among economic agents. While households associate higher expected inflation with lower output growth, professional forecasters link higher future inflation to higher output growth. Firms’ expectations display neither negative nor positive correlations. We explain such patterns </span></span><em>jointly</em><span> in a general equilibrium New Keynesian framework. Asymmetric information arises naturally as (i) households and firms receive imperfect, asymmetric information about supply and demand shocks, and (ii) the central bank learns from equilibrium outcomes (i.e., output and inflation) as opposed to the private sector. Survey data help uncover the magnitudes of information frictions among economic agents.</span></p></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"143 ","pages":"Article 103529"},"PeriodicalIF":4.3000,"publicationDate":"2024-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Monetary Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0304393223001253","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Recent survey evidence reveals misaligned inflation expectations among economic agents. While households associate higher expected inflation with lower output growth, professional forecasters link higher future inflation to higher output growth. Firms’ expectations display neither negative nor positive correlations. We explain such patterns jointly in a general equilibrium New Keynesian framework. Asymmetric information arises naturally as (i) households and firms receive imperfect, asymmetric information about supply and demand shocks, and (ii) the central bank learns from equilibrium outcomes (i.e., output and inflation) as opposed to the private sector. Survey data help uncover the magnitudes of information frictions among economic agents.
期刊介绍：
The profession has witnessed over the past twenty years a remarkable expansion of research activities bearing on problems in the broader field of monetary economics. The strong interest in monetary analysis has been increasingly matched in recent years by the growing attention to the working and structure of financial institutions. The role of various institutional arrangements, the consequences of specific changes in banking structure and the welfare aspects of structural policies have attracted an increasing interest in the profession. There has also been a growing attention to the operation of credit markets and to various aspects in the behavior of rates of return on assets. The Journal of Monetary Economics provides a specialized forum for the publication of this research.
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