Anchored Inflation Expectations

We develop a theory of low-frequency movements in inflation expectations, and use it to interpret joint dynamics expectations for the United States other countries over postwar period. In our theory, long-run are endogenous. They driven by short-run surprises, way that depends on recent forecasting performance monetary policy. This distinguishes from common explanations properties inflation. The model, estimated using only short-term forecasts professional surveys, accurately predicts observed measures long-term identifies episodes unanchored expectations. (JEL D83, D84, E12, E23, E31, E37, E52)