Cardiff University, Cardiff Business School, Cardiff
The purpose of this paper is to investigate the nature of professionals' inflation forecasts inattentiveness. We introduce and empirically investigate a new generalized model of inattentiveness due to informational rigidity. In doing so, we outline a novel model that considers the non-linear relationship between inattentiveness and aggregate uncertainty, which crucially distinguishes between macro-economic and data ( measurement error) uncertainty. The empirical analysis uses the Survey of Professional Forecasters data and indicates that inattentiveness due to imperfect information explains professional forecasts' dynamics.
Inflation Forecasts Information Rigidities Inattentiveness Uncertainty Survey Forecasts