Explaining Disagreement on Interest Rates in a Taylor-Rule Setting

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Most studies on disagreement focus on one specific variable, thereby neglecting the fact that disagreement can be co‐moving with disagreement on other variables. In this paper, we explore to what extent disagreement regarding the interest rate is driven by disagreement on inflation and unemployment. This relationship can be motivated by the theoretical concept of the Taylor rule. Using survey microdata for both professional forecasters and consumers, we provide evidence that disagreement on the interest rate is mainly driven by disagreement on inflation. We further show that disagreement is significantly influenced by central bank transparency, as well as news on money and credit conditions.
Original languageEnglish
JournalThe Scandinavian Journal of Economics
Volume119
Issue number4
Pages (from-to)987-1009
Number of pages23
ISSN0347-0520
DOIs
Publication statusPublished - 10.2017
Externally publishedYes

    Research areas

  • Economics - Inflation expectations, interest-rate expectations, survey microdata, taylor rule, unemployment expectations

DOI

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