The Diffusion of Inflation Expectations: Theory and Evidence

摘要: The assumption of homogenous representative agents with perfect rationality is challenged by recent macroeconomic literature. In this paper, we consider an asymmetric information diffusion process from more-informed to less-informed in a standard cobweb-type expectation model. Our main finding that agents' forecasts confound those whenever there misinterpretation the acquisition process. We term situation boomerang effect. Using inflation forecasting data Survey Research Center, find effect exists behavior. implication centers on policymaker's disseminating policy/public transparent manner.