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Are UK inflation expectations rational?

Author

Listed:
  • Hasan Bakhshi
  • Anthony Yates

Abstract

This paper tests for unbiasedness in inflation expectations drawn from a survey of UK employees by Gallup. It focuses on the econometric difficulties presented by having a small sample, there being overlapping forecast horizons and by trying to make inference when the data appear to be non-stationary. Applying a method of inference suggested by Inder (1993) the paper concludes that measured expectations systematically overstate inflation. The paper checks the robustness of this result by looking at alternative survey data and by using alternative techniques for modelling the long run.

Suggested Citation

  • Hasan Bakhshi & Anthony Yates, 1998. "Are UK inflation expectations rational?," Bank of England working papers 81, Bank of England.
    • Handle: RePEc:boe:boeewp:81
    as

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    File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/1998/wp81.pdf
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    References listed on IDEAS

    as
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