The Review of Economics and Statistics Vol. 81 No. 2 1999
Differential Interpretation of Information in Inflation Forecasts
Abstract
We test the hypothesis associated with a standard assumption in the theoretical literature on learning: that economic agents interpret information identically. We use a data set based on a survey of Israeli business executives forecasting future inflation. One of the main advantages of using this data is that a major change in the inflation regime in 1985 can be treated as a natural experiment in new beliefs formation. We develop a methodology for testing this hypothesis and find evidence that is inconsistent with the identical-interpretation hypothesis, but is consistent with the proposed alternative.
- DOI
- 10.1162/003465399558193
- Volume
- 81
- Issue
- 2
- Pages
- 217-226
- Language
- en
- Sources
- openalex crossref