Abstract
The way expectations are formed is a crucial economic issue, far from being resolved. Strategic response of forecasters to the consensus belief can explain key features of expectations formation documented in survey data. However, empirical evidence for such a response could be criticized on the basis of the underlying informational assumptions. This study exploits a special design, in an Israeli survey of firm-level inflation forecasts, which controls the information about consensus reported to the participants. We find a significant tendency of anti-herding, which is also related to the inflation level. As the inflation rate decreases, the tendency to anti-herd diminishes. This may suggest that a greater attention to inflation is associated with over-response to consensus.
Original language | English |
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Article number | 105523 |
Journal | Economic Modelling |
Volume | 100 |
DOIs | |
State | Published - Jul 2021 |
Bibliographical note
Publisher Copyright:© 2021 Elsevier B.V.
Keywords
- Anti-herding
- Inflation
- Information rigidities
- Survey forecasts