Startseite Wirtschaftswissenschaften Inflation Uncertainty from Firms’ Perspective, Overconfidence and Credibility of Monetary Policy
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Inflation Uncertainty from Firms’ Perspective, Overconfidence and Credibility of Monetary Policy

  • Fernando Borraz , Anna Orlik EMAIL logo und Laura Zacheo
Veröffentlicht/Copyright: 30. Juli 2024

Abstract

This paper uses survey data to gauge firms’ inflation uncertainty. First, it shows how commonly used proxies of uncertainty, such as ex post squared forecast errors or forecast dispersion differ from measures of actual ex ante inflation uncertainty. Second, this paper documents novel stylized facts: firms’ uncertainty and overconfidence – low ex ante variances compared to ex post (squared) forecast errors – are shown to be relevant for how firms’ form their beliefs about inflation and their inflation forecasts accuracy (firms know what they do not know) and to impact firms’ beliefs about credibility of monetary policy.

JEL Classification: D84; E31; E58

Corresponding author: Anna Orlik, Federal Reserve Board, Washingto n, DC , USA, E-mail:

Acknowledgments

This paper supersedes Borraz and Zacheo (2022). The views expressed herein are those of the authors and do not necessarily reflect the position of the Banco Central del Uruguay, the Board of Governors of the Federal Reserve, or the Federal Reserve System. We want to thank Juan Dubra and seminar participants at the Board of Governors of the Federal Reserve System, 2024 North American Summer Meeting of the Econometric Society, International Economic Association World Congress 2023, University of Bamberg, Banco Central del Uruguay, and Universidad de la República for their useful comments. We thank the editor and two anonymous referees for their comments and suggestions, which led to a substantial revision of this paper. All remaining errors are ours.

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Received: 2023-01-31
Accepted: 2024-06-26
Published Online: 2024-07-30

© 2024 Walter de Gruyter GmbH, Berlin/Boston

Heruntergeladen am 31.12.2025 von https://www.degruyterbrill.com/document/doi/10.1515/bejm-2023-0161/html
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