In this paper, we evaluate a model that describes real-time inflation data together with the expectations measured by Survey of Professional Forecasters (SPF). We work second-order autoregressive in which agents learn over time intercept and persistence coefficients based on data. To process revisions real data, allow for news noise disturbances. contrast to usual time-varying parameter vector ...

Abstract We use administrative and survey-based micro data to study the relationship between cognitive abilities (IQ), formation of inflation expectations, consumption plans a representative male population. High-IQ men display 50$\%$ lower forecast errors for than other men. men, but not others, have consistent expectations perceptions over time. In terms choice, only high-IQ increase their pr...

This paper focusses on survey expectations and discusses their uses for testing and modeling of expectations. Alternative models of expectations formation are reviewed and the importance of allowing for heterogeneity of expectations is emphasized. A weak form of the rational expectations hypothesis which focusses on average expectations rather than individual expectations is advanced. Other mod...