2018
DOI: 10.2139/ssrn.3263249
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On the External Validity of Experimental Inflation Forecasts: A Comparison with Five Categories of Field Expectations

Abstract: Establishing the external validity of experimental inflation forecasts is essential if laboratory experiments are to be used as decision-making tools for monetary policy. Our contribution is to document whether different measures of inflation expectations, based on various categories of agents (participants in experiments, households, industry forecasters, professional forecasters, financial market participants and central bankers), share common patterns. We do so by analysing the forecasting performance of th… Show more

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Cited by 13 publications
(19 citation statements)
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“…The experiment was conducted at the Vancouver School of Economics' Experimental Economics Laboratory in British Columbia. The subject pool consisted of undergraduate participants, who have, as a general population, been shown to be well-incentivized by monetary rewards and whose forecasting behavior is consistent on many dimensions with professional forecasters, households, and rms (Cornand and Hubert, 2018). Subjects with no experience in LTF experiments were invited to participate in sessions that involved 30 minutes of instruction and 90 minutes of game participation.…”
Section: Methodsmentioning
confidence: 99%
“…The experiment was conducted at the Vancouver School of Economics' Experimental Economics Laboratory in British Columbia. The subject pool consisted of undergraduate participants, who have, as a general population, been shown to be well-incentivized by monetary rewards and whose forecasting behavior is consistent on many dimensions with professional forecasters, households, and rms (Cornand and Hubert, 2018). Subjects with no experience in LTF experiments were invited to participate in sessions that involved 30 minutes of instruction and 90 minutes of game participation.…”
Section: Methodsmentioning
confidence: 99%
“…Worth noting here is the counter-balancing effect of expectations on this system. Equation (9) and Equation (10) retain the familiar feature that one-period-ahead expectations are self-fulfilling but we also see, perhaps counter-intuitively, that two-period-ahead expectations are not self-fulfilling. However, this counter-balancing of expectations makes sense from the perspective of consumption smoothing.…”
Section: Data-generating Processmentioning
confidence: 54%
“…Further, there is increasing evidence that student subjects' behavior is usually a very good approximation to that of the more general public operating in more naturalistic settings. For instance, Cornand & Hubert, (2020) report that the inflation forecast errors made by participants in laboratory learning-to-forecast experiments are similar to those made by households, industry and professional forecasters in survey data, as well as with the implicit inflation expectations from financial market (swap) data. The only inflation forecasts that were found to be less error-prone (more accurate and less systematically biased) and consistent with the full information rational expectation benchmark were those made by central banks!…”
Section: Discussionmentioning
confidence: 79%