Inflation expectations consistent with expected utility theory: NY Fed paper
A New York Federal Reserve paper, published on Tuesday, finds evidence that beliefs about the future level of inflation influence agents’ economic decisions.
Olivier Armantier, Wändi Bruine de Bruin, Giorgio Topa, Wilbert van der Klaauw and Basit Zafar, the paper’s authors, compare the inflation expectations reported by consumers in a survey with their behaviour in a financially incentivised investment experiment, whereby future levels of inflation affect payoffs.
The inflation expectations
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