The Inaccuracy of Inflation Expectations

New post by Timothy Taylor on Conversable Economist posted on 17th February.

“The question of whether a burst of inflation turn into permanent inflation should depend, at least in part, on expectations about inflation. If workers and firms expect higher inflation, then the workers are more likely to press for higher wages to compensate–and firms are more likely to be amenable to such increases. An inflationary cycle can emerge where expectations of higher inflation lead to more price and wage increases, and those price and wage increases lead to higher inflation.”

Read more by clicking here.

Posted by at 9:30 AM

Labels: Forecasting Forum


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