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Ben Bernanke vs. Janet Yellen: Exploring the (a)symmetry of individual and aggregate inflation expectations

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  • Nikola Mirkov
  • Andreas Steinhauer

Abstract

We conducted a simple, anonymous survey at the beginning of 2014, asking around 200 economists worldwide to reveal their inflation expectations, conditional on either Ben Bernanke or Janet Yellen being the chair of the Board of Governors of the Federal Reserve. We use the change in the Fed's leadership to focus attention on the difference in conditional expectations, while we are interested in the distribution of those expectations. The outcome of the survey shows that a significant share of respondents revealed asymmetric inflation expectations and that the deviation from symmetry is sizeable. Nonetheless, individual asymmetry in forecasts appears to be irrelevant for the aggregate distribution, as the number of respondents who factor in excess inflation broadly matches the number of those who gave more weight to disinflationary outcomes. The aggregate distribution we obtain is largely comparable to the outcome of the Survey of Professional Forecasters for the first quarter of 2014.

Suggested Citation

  • Nikola Mirkov & Andreas Steinhauer, 2015. "Ben Bernanke vs. Janet Yellen: Exploring the (a)symmetry of individual and aggregate inflation expectations," Working Papers 2015-10, Swiss National Bank.
    • Handle: RePEc:snb:snbwpa:2015-10
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    References listed on IDEAS

    as
    1. Clements, Michael P., 2010. "Explanations of the inconsistencies in survey respondents' forecasts," European Economic Review, Elsevier, vol. 54(4), pages 536-549, May.
    2. Engelberg, Joseph & Manski, Charles F. & Williams, Jared, 2009. "Comparing the Point Predictions and Subjective Probability Distributions of Professional Forecasters," Journal of Business & Economic Statistics, American Statistical Association, vol. 27, pages 30-41.
    3. Lahiri, Kajal & Teigland, Christie & Zaporowski, Mark, 1988. "Interest Rates and the Subjective Probability Distribution of Inflation Forecasts," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(2), pages 233-248, May.
    4. Garcí­a, Juan Angel & Manzanares, Andrés, 2007. "What can probability forecasts tell us about inflation risks?," Working Paper Series 825, European Central Bank.
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    More about this item

    Keywords

    inflation expectations; subjective probability distributions;

    JEL classification:

    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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