Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173462
Authors: 
Boneva, Lena
Cloyne, James
Weale, Martin
Wieladek, Tomasz
Year of Publication: 
2016
Series/Report no.: 
External MPC Unit Discussion Paper 48
Abstract: 
In many forward-looking macroeconomic models, such as the New Keynesian model, firms' expectations about the future play a key role in determining outcomes today. We examine this hypothesis using a novel panel dataset on firms actual and expected price changes collected by the Confederation of British Industry. Our microeconometric approach overcomes the identification issues faced by previous empirical studies. The results suggest that firms' expectations play a key role in their price-setting behaviour, with a coefficient on firm's expectations consistent with the discount factor typically assumed in macroeconomic models.
Subjects: 
Pricing-setting
survey data
inflation expectations
New Keynesian Phillips Curve
JEL: 
C23
C26
E31
Document Type: 
Working Paper

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