Working Paper, Konjunkturinstitutet - National Institute of Economic Research
No 114:
The Properties of Survey-Based Inflation Expectations in Sweden
Thomas Jonsson ()
and Pär Österholm ()
Abstract: This paper assesses the properties of survey-based
inflation expectations in Sweden. The survey is conducted by Prospera once
every quarter and consists of respondents from businesses and labour-market
organisa-tions. The paper shows that inflation expectations measured in
this sur-vey tend to be biased and inefficient forecasts of future
inflation. Results also indicate that long-run inflation expectations are
overly adaptive with respect to actual inflation. Finally, evaluations of
forecast accuracy show that these inflation expectations are worse
predictors of inflation than those of a professional forecasting
institution and also typically outper-formed by a simple autoregressive
model. Overall, our results indicate that economic agents’ expectations
formation process is suboptimal and/or the survey fails to capture the true
inflation expectations.
Keywords: Survey data; Inflation targeting; (follow links to similar papers)
JEL-Codes: E52; (follow links to similar papers)
31 pages, December 1, 2009
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