Fed's Kohn on modeling inflation

In a speech on 'Modeling inflation: A policymaker's perspective' given on 20 May, Donald Kohn of the Federal Reserve called for improvements in inflation modeling, saying an increase in core US inflation in 2004 and 2005 caught him and many other forecasters by surprise.

"We use proxies -- most often surveys of economists, whose projections may be influenced by their knowledge of other economists' projections, and of households, who may or may not understand the question or have a realistic

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