A Method of Exploring the Mechanism of Inflationary Expectations Based on Qualitative Survey Data

A Comparative Study of Alternative Methods of Quantifying Qualitative Survey Responses Using NAPM Data

“…The C-P series was consistently above the new series in the 1960s but below in the 1970s. A similar finding was reported by Foster and Gregory (1977) and Pesaran (1985) and is implicit in the work of Kanoh and Li (1990, fig. 1).…”

“…An alternative to this rather simple approach is to postulate some parametric specification for 8t in terms of lagged 6t, /,, o, and any other relevant variables and use the maximum likelihood technique to estimate (/,, oa-, 58) conditional on this model for 8t. A similar approach was followed by Seitz (1988) and Kanoh and Li (1990) with varying degrees of success. For instance, Seitz (1988) did not find the threshold to depend on either the level or the variance of inflation.…”

“…For instance, Seitz (1988) did not find the threshold to depend on either the level or the variance of inflation. In the work of Kanoh and Li (1990), the estimated expected inflation rates have the uninteresting property that they look like simple autoregressive predictions and consistently lag behind the actual rates by one period.…”