, Volume 41, Issue 1, pp 69–81 | Cite as

Inflation and output growth uncertainty in individual survey expectations

  • Maritta Paloviita
  • Matti Viren
Original Paper


This paper studies uncertainty using the ECB Survey of Professional Forecasters’ data. Both inflation and real GDP growth forecasts at the micro level are considered. Our analysis indicates that individual inflation uncertainty is closely related to output growth uncertainty. Individual forecasters seem to behave according to an uncertainty-augmented hybrid specification of the New Keynesian Phillips curve. We also find evidence that inflation uncertainty has a negative impact on economic activity by lowering output growth, boosting inflation and reducing the price-sensitiveness of aggregate supply.


Forecasting Survey data Expectations Phillips curve 

JEL Classification

C53 E37 E31 



Antti Komonen, Sami Oinonen and Tarja Yrjölä have kindly derived the data. Useful comments from two anonymous referees are also acknowledged.


  1. Baker S, Bloom N, Davis S (2012) Has economic policy uncertainty hampered the recovery? Chicago Booth Research Paper N. 12-06Google Scholar
  2. Bloom N (2009) The impact of uncertainty shocks. Econometrica 77(3):623–685CrossRefGoogle Scholar
  3. Boero G, Smith J, Wallis KF (2008) Uncertainty and disagreement in economic prediction: the Bank of England survey of external forecasters. Econ J 118:1107–1127CrossRefGoogle Scholar
  4. Bowles C, Friz R, Genre V, Kenny G, Meyler A, Rautanen T (2007) The ECB survey of professional forecasters: a review after eight years experience. ECB Occasional Paper 58Google Scholar
  5. Bowles C, Friz R, Genre V, Kenny G, Meyler A, Rautanen T (2010) An evaluation of the growth and unemployment forecasts in the ECB survey of professional forecasters. OECD J 2:1–28Google Scholar
  6. Conflitti C (2011) Measuring uncertainty and disagreement in the European survey of professional forecasters. OECD J 2:69–103Google Scholar
  7. Döpke J, Fritsche U (2006) When do forecasters disagree? An assessment of German growth and inflation forecast dispersion. Int J Forecast 22:125–135CrossRefGoogle Scholar
  8. Dovern J, Fritsch U, Slacalek J (2009) Disagreement among forecasters in G7 countries. ECB Working Paper 1082Google Scholar
  9. Fendel R, Lis E, Rülke JC (2011) Do professional forecasters believe in the Phillips curve? Evidence from G7 countries. J Forecast 30:268–287Google Scholar
  10. Friedman M (1977) Nobel lecture: inflation and unemployment. J Polit Econ 85(3):451–472CrossRefGoogle Scholar
  11. Kenny G, Kostka T, Masera F (2012) How informative are the subjective density forecasts of macroeconomists? ECB Working Paper, 1446Google Scholar
  12. Kortelainen M, Paloviita M, Viren M (2011) Observed inflation forecasts and the New Keynesian macro model. Econ Lett 112(1):88–90CrossRefGoogle Scholar
  13. Leduc S, Liu Z (2012) Uncertainty, Unemployment, and Inflation. FRBSF Econ Lett 28:1–5Google Scholar
  14. Levi M, Makin J (1980) Inflation uncertainty and the phillips curve: some empirical evidence. Am Econ Rev 70(5):1022–1027Google Scholar
  15. Lucas R (1973) Some international evidence on output-inflation trade-offs. Am Econ Rev 63:326–334Google Scholar
  16. Pesaran MH, Weale M (2006) Survey expectations. In: Elliot G, Granger CWJ, Timmermann A (eds) Handbook in economic forecasting, chapter 14. Elsevier, AmsterdamGoogle Scholar
  17. Sill K (2012) Measuring economic uncertainty using the survey of professional forecasters. Business Review of Philadelphia FED, Q4/2012:16-27Google Scholar
  18. Sinclair P (2010) Inflation expectations ed. Peter J. N. Sinclair, Routledge International Studies in Money and Banking, LondonGoogle Scholar
  19. Tillmann P (2010) The Fed’s perceived Phillips curve: evidence from individual FOMC forecasts. J Macroecon 32:1008–1013CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Bank of FinlandHelsinkiFinland
  2. 2.University of TurkuTurkuFinland

Personalised recommendations