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Are subjective distributions in inflation expectations symmetric?


Mirkov, Nikola; Steinhauer, Andreas (2014). Are subjective distributions in inflation expectations symmetric? Working paper series / Department of Economics 173, University of Zurich.

Abstract

We conducted an anonymous survey in December 2013 asking around 200 economists worldwide to provide an interval (a to b) of average inflation in the US expected "over the next two years". The respondents were also instructed to give a probability of inflation being higher or lower than the mid-interval (a+b)/2. The aggregate distribution of inflation expectations we obtain closely resembles the outcome of the Survey of Professional Forecasters for 1Q2014. More importantly, we find that the subjective probability mass on either side of the mid-interval is not statistically different from 0.5, which means that the subjective distributions are symmetric. Our results align well with several papers evaluating the Survey of Professional Forecasters or similar data sets and finding no significant departures from symmetry.

Abstract

We conducted an anonymous survey in December 2013 asking around 200 economists worldwide to provide an interval (a to b) of average inflation in the US expected "over the next two years". The respondents were also instructed to give a probability of inflation being higher or lower than the mid-interval (a+b)/2. The aggregate distribution of inflation expectations we obtain closely resembles the outcome of the Survey of Professional Forecasters for 1Q2014. More importantly, we find that the subjective probability mass on either side of the mid-interval is not statistically different from 0.5, which means that the subjective distributions are symmetric. Our results align well with several papers evaluating the Survey of Professional Forecasters or similar data sets and finding no significant departures from symmetry.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C42, E31
Language:English
Date:September 2014
Deposited On:10 Sep 2014 10:32
Last Modified:08 Dec 2017 07:07
Series Name:Working paper series / Department of Economics
Number of Pages:16
ISSN:1664-7041
Official URL:http://www.econ.uzh.ch/static/wp/econwp173.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php

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