Supply shocks and the rationality of inflation forecasts (original) (raw)

This study investigates the rationality of inflation forecasts produced by professional economists and households in the context of supply shocks. A review of historical literature reveals a pattern of bias and inefficiency in these forecasts, particularly during significant supply disruptions. Through empirical analysis, including testing for accuracy and biases in forecasts predicated on different supply conditions, the paper seeks to clarify how supply shocks affect the forecasting accuracy and efficiency in predicting future inflation.