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Inflation expectations in Costa Rica

Author

Listed:
  • Alfaro Ureña, Alonso
  • Monge Badilla, Carlos

Abstract

The Banco Central de Costa Rica (BCCR) is currently transitioning to an Inflation Targeting (IT) regime. In such context, it is relevant for the monetary authority to characterize in the most complete way possible the inflation expectations of the population, both in the particular elements of the forecasts and in the processes by which agents take information into account for their individual predictions. This paper documents the analysis of the inflation expectations data contained in the Monthly Survey of Inflation and Exchange Rate Expectations. We test several hypotheses such as rational and adaptive expectations. The results show significant biases in those expectations, while there is also a lack of learning from past errors by the agents surveyed.

Suggested Citation

  • Alfaro Ureña, Alonso & Monge Badilla, Carlos, 2014. "Inflation expectations in Costa Rica," Revista de Ciencias Económicas, Instituto de Investigaciones en Ciencias Económicas, Universidad de Costa Rica, vol. 32(1), December.
    • Handle: RePEc:rce:rvceco:15054
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    File URL: https://revistas.ucr.ac.cr/index.php/economicas/article/view/15054
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