Differential interpretation of information in inflation forecasts

Eugene Kandel, Ben Zion Zilberfarb

Research output: Contribution to journalArticlepeer-review

33 Scopus citations


We test the hypothesis associated with a standard assumption in the theoretical literature on learning: that economic agents interpret information identically. We use a data set based on a survey of Israeli business executives forecasting future inflation. One of the main advantages of using this data is that a major change in the inflation regime in 1985 can be treated as a natural experiment in new beliefs formation. We develop a methodology for testing this hypothesis and find evidence that is inconsistent with the identical-interpretation hypothesis, but is consistent with the proposed alternative.

Original languageAmerican English
Pages (from-to)217-226
Number of pages10
JournalReview of Economics and Statistics
Issue number2
StatePublished - May 1999


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