Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212240
Authors: 
Paloviita, Maritta
Virén, Matti
Year of Publication: 
2012
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 37/2012
Abstract: 
This paper studies uncertainty using the ECB Survey of Professional Forecasters' data. We consider both inflation and real GDP growth forecasts at the micro level and explore forecast uncertainty using two alternative measures, i.e. conventional standard deviation of individual point forecasts and the median values of individual forecasters' uncertainty, which are based on subjective probability distributions of survey respondents. Our analysis indicates that individual inflation uncertainty is closely related to the output growth uncertainty. In forming expectations, individual forecasters seem to behave according to an uncertainty-augmented hybrid specification of the New Keynesian Phillips curve. We also find evidence that inflation uncertainty has a negative impact on economic activity by decreasing output growth and increasing inflation and lowering the price sensitiveness of aggregate supply.
Subjects: 
Forecasting
Survey data
Expectations
Phillips curve
JEL: 
C53
E37
E31
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-832-7
Document Type: 
Working Paper

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