TY - JOUR
T1 - Differential interpretation of information in inflation forecasts
AU - Kandel, Eugene
AU - Zilberfarb, Ben Zion
PY - 1999/5
Y1 - 1999/5
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=0033410725&partnerID=8YFLogxK
U2 - 10.1162/003465399558193
DO - 10.1162/003465399558193
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AN - SCOPUS:0033410725
SN - 0034-6535
VL - 81
SP - 217
EP - 226
JO - Review of Economics and Statistics
JF - Review of Economics and Statistics
IS - 2
ER -