Publication

This paper examines the empirical properties of inflation expectations data constructed on the basis of both qualitative and quantitative surveys of consumers for a set of eight European countries. The rational perceptions hypothesis is tested and rejected by the data, a finding which in turn leads the author to reject the rational expectations hypothesis and casts doubt on the New Keynesian Phillips Curve model. Moreover the paper sheds light on some shortcomings of various alternative models addressing the same issue. Finally, the author provides some insights into the nature of the interaction between monetary policy and inflation expectations.