Wiley, Ohio State University Press Journal of Money, Credit and Banking

Models of Inflation Expectations Formation: A Comparison of Household and Economist
Forecasts
Author(s): Edward M. Gramlich
Source: Journal of Money, Credit and Banking, Vol. 15, No. 2 (May, 1983), pp. 155-173
Published by: Ohio State University Press
Stable URL: http://www.jstor.org/stable/1992397
Accessed: 04-07-2016 11:28 UTC
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
http://about.jstor.org/terms
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted
digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about
JSTOR, please contact support@jstor.org.
Wiley, Ohio State University Press are collaborating with JSTOR to digitize, preserve and extend access
to Journal of Money, Credit and Banking
This content downloaded from 178.250.250.21 on Mon, 04 Jul 2016 11:28:08 UTC
All use subject to http://about.jstor.org/terms
EDWARD M. GRAMLICH*
Models of Inflation Expectations Formation
A Comparison of Household and Economist Forecasts
THE RECENT APPRECIATION of the critical role played by

expectations of inflation in the behavior of macromodels has stimulated empirical
studies of the formation of expectations by different groups. Time series survey data
on expectations of inflation exist now for economists, households, and businesses.
These data have been used as independent variables in explaining wage behavior
(Gordon [16], Turnovsky and Wachter [34], and de Menil and Bhatta [5]), prices
(Turnovsky and Wachter [34] and Wachtel [36]), interest rates (Gibson [14], Hen-
dershott and Van Horne [19], Pearce [30], and Mishkin [27]), and consumption
(Wachtel [36]), generally with a significant improvement in explanatory power.
They have also been used as dependent variables in attempts to determine how
expectations are formed by Gordon [15], Mullineaux [28], Jacobs and Jones [20],
and Figlewski and Wachtel [9] for the economist survey, Van Duyne [35] for the
household survey, and Leonard [23] and de Leeuw and McKelvey [4] for
businesses.
Given their different levels of knowlege of economics and perspectives, one
might expect that the models used by the different groups to forecast inflation would
*I would like to thank Deborah Laren, Jeffrey Mackie-Mason, Susan Shermis, and Gary Woodard for
research assistance on the paper, John Carlson and Thomas Juster for supplying data, and Gardner
Ackley, Frank de Leeuw, William Fellner, George Perry, and Carl Van Duyne for helpful comments on
. .
an ear ler verslon.
EDWARD M. GRAMLICH is director, Institute of Public Policy Studies, University of

Michigan.
Journal of Money, Credit, and Banking, Vol. 15, No. 2 (May 1983)
Copyright (C) 1983 by the Ohio State University Press
156 : MONEY, CREDIT, AND BANKING
differ substantially, both in the way these models are formed and in forecasting
accuracy. In this paper I make an explicit comparison of the forecasts made by the
different groups. The survey data for economists and randomly selected households
are subjected to some standard econometric tests to see how accurate the forecasts
are, how rationally they are made, what variables appear to be instrumental in the
formation of inflation expectations, and whether the models generating inflation
expectations have changed over time. The results give some information on the
value of knowledge of economics in forecasting inflation and, implicitly, in avoid-
ing its welfare losses.l Alorlg with this, a related goal of the paper is to try to
identify some of the more elusive political and credibility variables that are now
alleged to be important short-run determinants of expected inflation.2 Are these
variables influenced by government policy, either of a short-run announcement
variety or by a mere basic macropolicy posture of accommodation or nonaccom-
modation of previous inflation?
The first section of the paper derives a general two-equation expectations forma-
tion model. The first equation is the classical rational expectations forecasting
equation of Muth [29] and Theil [33], the one used to test the unbiasedness and
efficiency of forecast data by several authors now. The second equation is that
explaining how expectations are actually set. Since the structure of this equation
depends on how individuals perceive the macroeconomy to operate, it is hard to
exclude different models a priori, and I have adopted a rather general formulation of
the relationship.
The next section of the paper gives a short review of the data used to compare
inflation expectations for the groups. The third section presents tests of the rational
expectations equation, and the fourth gives the empirical models of expectations
formation for the different groups. The fifth section uses some of these results to test
Fellner's [8] hypothesis that government credibility in fighting inflation is itself
important in controlling inflation. A final section summarizes results.
A GENERAL MODEL OF INFLATION EXPECTATIONS
The first equation in this two-equation model provides the way to test for the
rationality of expectations, following Muth and Theil. They argued that an expecta-
tion is rational if it is an unbiased and efficient predictor of some relevant variable.
As applied to inflation forecasts, this means that a rational expectations predictor of
inflation satisfies the equation
P+l p + u, (1)
lOne issue that measuring inflation expectations does not necessarily test is whether entire markets
behave rationally even if mean survey responses do not appear to be set rationally. Mishkin [27] finds
that some financial markets do, but it is unlikely that arbitrage possibilities will present themselves for
other markets such as labor markets.
2The best formal statement of this idea, termed the credibility hypothesis, can be found in Fellner [7,
8]. Less rigorous statements appear quite commonly in the press.
EDWARD M. GRAMLICH : 157
where P+ 1 is the rate of inflation in period t + 1 and pe iS the expected rate of

inflation in t + 1, calculated from a survey taken in period t. The implied notational
convention I will use throughout the paper is that survey responses are dated by the
time the survey is actually taken, not by the time asked about in the survey. The
residual u is random with mean zero, with no serial correlation, and with no
correlation with pe. Should any of these properties not be fulfilled that is, should
there be a constant in the equation or a nonunitary coefficient Of pe pe would not
be an unbiased predictor of p since the mean p+ 1 would not always equal pe.
Should the residual properties not be fulfilled should the residual be serially
correlated, correlated with pe, or should additional independent variables be present
in the equation pe would not be an efficient predictor, because it would not
maximally exploit all available systematic information.3
The standard test of the rational expectations hypothesis is to estimate equations
of the form
P+1 = ao + alpe + u . (2)
pe iS an unbiased predictor of future inflation rates when the null hypothesis
Ho (aOSa 1 ) = (oS 1 ) (3)
is not rejected. It is an efficient predictor when there is no serial correlation of

residuals and when no other independent variable passes a test of statistical
slgnltlcance.
Whether pe passes this rationality test or not, a second equation must be added to
the forecasting model to explain how inflation expectations are set. Although those
building models of the entire economy from either a rational or adaptive expectation
perspective are inclined to write down rather different looking equations explaining
inflation expectations, in fact a general formulation can be developed that is con-
sistent with both perspectives.
Beginning with adaptive expectations, the pure form is the error-learning model
of Cagan [ 1 ],
pe _ pe 1 = bo(p-pe 1) '
where bo is the error adjustment coefficient and the time subscripts are set the same
as above. Survey responses of inflation for next period taken in period t(pe) respond
adaptively to errors in predicting this period's inflation, assumed to be known at
3Both Pesando [31] and Friedman [13] have also conducted internal consistency tests of the rationality
of forecasts by seeing whether forecasts of P+ 1, P+2, and so forth are consistent with forecasts of
longer-term rates of inflation. Pesando's tests were done with an early version of the Livingston economist
data, before Carlson [2] adjusted the data to take account of possible timing ambiguities. Friedman's tests
were done with a survey of bond trader expectations about interest rates. In this paper I do not conduct
any internal consistency checks.
pe = (1- bo)ibo P-is
least approximately at the time the present survey is taken. Solving backwards for
the reduced form of the expression yields
i=o
with the weights decaying geometrically according to the parameter (1-bo).

This simple decay-lage adaptive relationship can then be complicated to indicate
either extrapolative or regressive elements, similar to what was done for price levels
by Jacobs and Jones [20] or inflation rates by Curtin [3] and Figlewski and Wachtel
[9]. The more elaborate relationship can be written
pe _ pe 1 = bo(p-pe 1) + bl(p-P- 1) -b2(P-P) 5 (6)
where bl is an extrapolation coefficient applied to the change in the inflation rate

and b2 is a regression-to-normal coefficient if inflation is above some presumed
norm p. Solving this expression out and treating p as a constant yields
b w
pe = b2p + E [(1 -bo)i(bo + bl -b2)P-i-bl(l -bo)iP-i-l]. (7)
O i-O
This expression has properties similar to (5) except that now the lag is more
complicated, perhaps decaying (if bl = 0 and bozb2) but perhaps following some
higher-order polynomial. The lag obviously becomes even more complicated if the
inflation norm p is made endogenous.
But even (7) is a restrictive form of the adaptive model because it views economic
agents as looking only at current and past rates of price change. Another way to
broaden the model is to allow them to look at other current and past economic
variables as well, as both Gordon and Van Duyne have done. Letting A and B refer
to polynomials in the lag operator L, the modified relationship can be written as
pe = f(A(L)puB(L)Z) S (8)
where Z is a vector of variables plausibly related to inflation-current and past rates

of growth of the money supply, unemployment or capacity utilization, budget
deficits, supply shocks. Since many of the current values of p, money, unemploy-
ment, and other Z variables will not have been officially published at the time the
inflation expectations survey is taken, finding that current values of these variables
are significant suggests that households might get their information from true mar-
ket phenomena, not waiting until the official data have been published. Given the
dispersed dates at which data are published and inflation forecasts surveyed, and
given the strong degree of autocorrelation in many time series, however, it is

virtually impossible to test this hypothesis.4
A model similar to (8) can also be developed from a rational expectations per-
spective. Rational expectations models often begin with the classical velocity
equation
P = M + V-(Y-Y*)-Y*, (9)
where upper-case letters refer to the levels of the logs of the variables, and P, M, V,
Y, and Y* refer respectively to the price level, money supply, velocity, actual real
output, and full employment, or equilibrium, output. Taking derivatives under the
assumption that V and Y* change at constant rates gives
p=cO+m- d(Y-Y*), (10)
where m iS the rate of growth of the money supply, cO is the constant rate of change
of velocity less that of equilibrium output, and d refers to the derivative of the
output gap.
The output gap can be determined by a modified version of Lucas's [24] rational
expectations supply function,
r - Y* = C1(P - pe) + c2(Y r )-1 * (ll)
The first term is the Lucas term that makes output shocks depend positively on price
shocks, as if agents misinterpret higher than expected levels of general prices to
mean higher than expected levels of relative prices. With this term alone, there is no
way to explain business cycle persistence, so the second term gives these rational
expectations cycles more permanence by a decay-lag process. Justifications can be
staggered multiperiod wage contracts or unanticipated inventory changes, along
lines proposed by Phelps and Taylor [32] and Fischer [10]. Substituting the dif-
ference of (11) into (10) gives
p = CO + m-C1(P-pe) + (1 -c2)(Y-Y*)_l (12)
and, in terms of expectations,
pe = CO + Me + ( 1 C2)(Y ) X ( 13)
4A finding that bears on this question is that of Jonung [21], who shows that in Sweden women's
perceptions of inflation during 1978 were on average 2 percentage points higher than those of men,
presumably because relative food prices rose at about this rate and women do most of the shopping for
food. But Van Duyne [35] has tested what he calls the "biased expectations hypothesis" (that agents
place more weight on food price inflation than expenditure shares would indicate) formally for the United
States, and rejects it.
While there are important differences between pure adaptive expectations models
of the economy and pure rational expectations models, the modifications made in
both to make them "realistic" blur these differences substantially. The main dif-
ference is that the impure adaptive expectations model in (8) still has inflation
forecasters looking backwards at current and past rates of inflation, while the
impure rational model in (13) has them looking forward at expected future rates of
money growth. But even here the differences may be more apparent than real, if
expected future rates of money growth cannot be perfectly predicted, and are
probably themselves strongly conditioned either by current and past rates of infla-
tion or current and past rates of money growth, a plausible component of Z in (8).5
Hence no finding about money growth, current or past, and its relationship to
expected inflation can distinguish well between adaptive and rational expectations
economic models of the inflation process. Moreover, both equations (8) and (13)
have an unemployment or capacity utilization term, and (13) could readily be
modified as well to include budget deficits or supply shocks as direct components of
expected inflation, or at least as variables in a vector explaining expected rates of
money growth. Hence the only operational way to test whether expectations are
formed rationally or adaptively is by testing the predictive equation (2); the expecta-
tions formation equations (8) or (13) could be consistent with either model of the
inflation process.6
DATA ON INFLATIONARY EXPECTATIONS
Most of the papers that have dealt with inflation expectations survey data either as
an independent variable in explaining some other time series or as a dependent
variable using a survey by Joseph Livingston of the Philadelphia Inquirer. The
Livingston survey has been taken semiannually since 1946 of about fifty economic
forecasters, many of whom have responded for the entire period. Apart from the
small sample, the main problem with the survey is that, since it began before
inflation accelerated, Livingston has always asked his economic forecasters to
predict the level of the consumer price index (CPI), from which an expected infla-
tion rate could then be inferred. But in order to infer inflation rates, one must know
what forecasters thought the level of the price index was when making their fore-
cast. If prices changed sharply between the time Livingston mailed out the survey
and tabulated the results, the inflation rate implicitly expected by Livingston's
forecasters becomes conjectural. Carlson [2] tried to correct the deficiency by
reinterviewing respondents to find out what they knew or were assuming when they
sGrossman [18] shows that weekly money supply data are predicted rationally in the sense used here.
But the anticipated component of the money supply could well be related to variables such as those
mentloned.
6This statement might be viewed as a practical application of Friedman's proof that as economic
agents try to learn about the macrosystem, their rational expectations behave in a way that can be closely
approximated by an adaptive expectations scheme.
made their forecasts, and he has published revised estimates of expected rates of
inflation based on his reinterviews. These data are used here.
Another long-time survey of inflation expectations has been taken since 1948 by
Michigan's Institute for Social Research (ISR). The ISR survey has been relatively
little used by economists outside of ISR,7 but in many ways provides much richer
information. The sample consists of 1,000 randomly chosen households, who were
asked to predict prices of the things "they buy." The survey was taken quarterly for
most of the period and monthly for the past few years. Its main problem, again
reflecting changing inflationary times, is that the question sequence has been altered
substantially over the period. Before 1966 respondents were asked only for qualita-
tive forecasts (do you think prices of the things you buy will rise a lot, a little, not at
all, or decline?); since then they have been asked to give quantitative answers.
Juster and Comment [22] have tried to create a consistent series for the whole period
by creating qualitative data from the quantitative data for the later period, determin-
ing how means and variances are related in this period, and from this relationship
computing adjusted quantitative responses for the earlier period. A by-product of
this procedure is that there is now a time series on the mean and the variance of
expected inflation, and this variance is of interest in its own right. It shows that in
the post-1973 period, when inflation has become more rapid, the variance of ex-
pected inflation rates has approximately doubled, giving good supporting evidence
to those who argue that one of the main welfare losses of higher inflation rates is the
greater forecasting uncertainty and concomitant windfall losses.
Two more expectations series that describe business expectations of inflation
have recently been analyzed. As part of its plant and equipment survey, since 1970
the Bureau of Economic Analysis (BEA) has surveyed businesses on their estimates
of rates of price change for goods and services sold and capital goods purchased. The
overall plant and equipment survey covers 5,000 companies, of which about 3,000
answer the question on prices. Since these survey results have recently been exam-
ined by de Leeuw and McKelvey [4], I will not repeat their steps here, but will
compare their results with those derived from the above two surveys for economists
and households.8
TESTS OF THE RATIONAL EXPECTATIONS HYPOTHESIS
The tests for the rationality of inflation expectations for the three groups can be
made simply by estimating equation (2). I did this for households and economists,
with the results given and compared with those for identical tests of business
7de Menil and Bhalla [5] and Wachtel [36] used it as an independent variable in explaining other time
series, and Van Duyne [35] has used it as a dependent variable in testing his biased expectations
hypothesis.
8Another series involving business expectations, this time expectations of wage inflation of 170 large
and medium-sized corporations, has been published since 1948 by Frank Endicott of Northwestern
University and recently been analyzed by Leonard [23].
forecasters made by de Leeuw and McKelvey in Table 1. For each of the long time
series I show equations predicting inflation over the entire post-Korean War period
(waiting two years after the war for expectations to stabilize), and for the decade of
the seventies to be consistent with the BEA data. Since the household survey is
available quarterly, it contains twice as many degrees of freedom as the economist
survey.
TABLE I
TESTS OF THE RATIONAL EXPECTATIONS FORECASTING HYPOTHESIS: P+ l = aO + a]Pe + U (inflatiOn

eXPreSSed ;n annUa1 PerCentage rateS Of Change)
Households Economists Business*
Statistic 195S80 197F80 195S80 197S80 197S80
NO COrreCtiOn fOr Seria1 COrre1atiOn

aO -0.058 0.749 0.585 0.315 -0.112
(0.2) (0.7) (1.4) (0.2) (0.1)
a1 1.222 1.042 1.319 1.352 1.345
(2.1) (0.3) (3.2) (1.1) (2.2)
R2 0.797 0.589 0.790 0.491 0.304
SEE 1.639 2.139 1.691 2.481 5.69
D-W 0.70 0.75 0.65 0.66 n.r.
F-StatiStiCT 6.30 4.86 26.99 9.18 12.20
F CritiCa1 Va1UeT 4.88 5.18 5.13 6.01 4.70
F SignifiCanCe: 0.27 1.30 0.00 0.15
COrreCtiOn fOr Seria1 COrre1atiOn
aO 1.999 5.038 1.557 3.347

(4.3) (4.8) (2.0) (1.3)
a, 0.665 0.416 1.052 0.808
(4.2) (4.5) (0.3) (0 5)
RhO 0.650 0.625 0.675 0.670
R2 0.429 0.205 0.454 0.189
SEE 1.075 1.332 1.224 1.756
L;Ung-BOX SignifiCanCe 1eVe1§ 3.7 27.7 21.8 27.5
NOTE: Absolute t ratios for aO around 0 and al around I are in parentheses.

*Taken from pooled time series cross-section relationships explaining business .sales price inflation in de Leeuw and McKelvey 141.
tFor the joint hypothesis that aO = 0 and al = 1. If F is larger than the critical value, we can reject unbiasedness with 99 percent
confidence.
aFor test of the joint hypothesis that a>) = O and al = I . The hypothesis can be rejected with 100 - 0.27 = 99.73 percent probability (col.
1).
For test of residual serial correlation between lags of one and twelve periods after the first-order correction was made. The hypothesis
that there is no autocorrelation in the residuals can be rejected with 100 - 3.7 = 96.3 percent probability (col. 1).
Several points are clear from the table. First, the rational expectations hypotheses
that expectations should be unbiased and efficient fares rather poorly, supporting
the results of Wachtel [36], Pearce [30], Friedman [ 12], and Figlewski and Wachtel
[9]. Estimates of the intercept term aO are generally not statistically significant, a
point in favor of the unbiasedness hypothesis of rational expectations. Estimates of
the slope coefficients al generally are statistically different from unity (for this
coefficient the t ratios in the table have been recomputed to show significant dif-
ferences from one, not zero), though not for the seventies for both households
and economists. But an F test on the joint null hypothesis given in equation (3)
still rejects the hypothesis unbiasedness with 99 percent confidence in all but the
seventies equation for households, as shown by the bottom three lines in the top
panel.
Regarding efficiency, the low Durbin-Watson (D-W) statistics indicate that fore-
casts are not efficiently using all information either. These statistics suggest that
information from previous period residuals could be used to improve the forecast
accuracy of inflation. I tested this formally by estimating equations with a first-
order serial correlation correction and then applying Ljung-Box [24] tests of remain-
ing residual serial correlation for higher-order lags. The tests, in the bottom panel,
show that serial correlation still does not vanish, and the t-statistics suggest even
more decisive rejection of the hypothesis of unbiasedness.9
Comparing the results for households with those for economists, the F tests imply
the surprising conclusion that households generally forecast slightly more rationally
than either economist or business forecasters (the hypothesis of unbiasedness is not
so decisively rejected). Another surprise is that whether expectations are formed
rationally or not, the household relationship fits slightly better, as evidenced by its
lower standard error in predicting the same dependent variable (the rate of inflation as
measured by the consumer price index). '°
TABLE 2
FORECASTING ERROR STATISTICS FOR INFLATION EXPECTATIONS SURVEYS, 1978-79: MEAN OF ISR
SURVEY RESPONSE, BY INCOME AND EDUCATION (annual percentage rates of change)
Mean Root Mean U-Statistic, U-Statlstlc,

Group Surveyed Error* Square Error Level Changet
A11 households 3.68 3.79 0.09 12.44

High income§ 4.48 4.55 0.13 17.91
Low incomell 3.46 3.68 0.08 11.25
High education# 4.46 4.54 0.13 17.83
Low education** 3.02 3.15 0.06 8.61
*SInce all errors are positive, the mean error also equals the mean absolute error.
tTheil's U statlstlc for levels equals (p+l - pe)lEp2.
Thell's U statlstlc for changes equals (p+l - pe)/E(p+l _ p)2
§Households wlth family income greater than $20,000 in 1978
11 Households with famlly income less than $10,000 In 1978.
#Households where the head has some college education.
**Households where the head has not been to college.
That noneconomists seems to forecast inflation slightly more rationally, and

better, than economists seems sufficiently noteworthy that it should be verified by
other evidence. The only such outside evidence that I can find is quite sketchy, but
it does lead to the same conclusion. Curtin [3] disaggregates the ISR household data
9I do not show the joint F-statistics in the bottom panel because they become inappropriate in the
presence of an autocorrelation coefficient. Residuals after serial correction cannot be compared because
the correction factors could differ. Residuals before correction cannot be compared because movements
of the coefficients away from 0 and 1 will raise the unrestricted sum of squared residuals above the
ordinary least squares (OLS) minimizing value and lower the F-statistic.
I°Since it is not clear that economists and households would be trying to forecast the rate of inflation
for the same price index, I repeated all tests with two other commonly used rates of inflation as the
dependent variable. One was the GNP deflator, the other was the national accounts deflator for personal
consumption expenditures. All major conclusions were the same. In addition, since the CPI contains
more random variation than the other deflators, the standard errors in predicting the CPI are larger than
those in predicting the others.
by income and education for five quarters in 1978-79 where this is possible. The
results, shown in Table 2, again suggest that whatever standard of predictive ac-
curacy is used (mean error, mean absolute error, root mean square error, Theil's U
statistic on levels or changes), low-income and low-education households forecast
inflation better, by from 1 to 1.5 percentage points in 1978-79. The previous
finding speaks poorly of knowledge of economics in forecasting inflation; this
speaks poorly for education in general. Of course, it should also be remembered that
1978-79 was a time when inflation was accelerating, when all households were
underpredicting, when congenital pessimists were coming closer to the mark than
others-and there is probably a stronger representation of congenital pessimists
among the poor and undereducated.
THE FORMATION OF INFLATION EXPECTATIONS
The next part of the model of expectations formation to be tested for households
and economists is the equation explaining how inflation expectations are deter-
mined. The precise equation fitted, a representation of either the modified adaptive
expectations equation (8) or the modified rational expectations equation (13), is
pe = f(A(L)p,B(L)m, C(L)w,D(L)f, (Y-Y* ) ,S) , ( 14)
where w stands for the rate of change of wages, f for a fiscal impact variable, and S
for a series of shock dummies. Distributed lags are estimated for the first four
independent variables. The last two were entered only contemporaneously, either
because they were shift dummies of one sort or another or because, as in the case of
the output gap, serial correlation of the independent variable was so strong that a
distributed lag added little new information. Apart from the lag price terms and the
shift dummies, the independent variables were tested one by one, with a composite
equation estimated at the end including all of the successful variables.
In terms of timing, the ISR survey is quarterly and is taken approximately at the
middle of the quarter. This is at least two months before final data on p, m, and Y for
the quarter are officially published, but some of the component monthly figures
would be known. The Livingston survey is taken near the end of the half year, and
alert forecasters should have reasonably good, though not final, knowledge of
contemporaneous values of the independent variables.
Definition of all of the variables is standard for present vintage econometric
models, though of course it may not be appropriate for showing how expectations
are set. The money supply used was M1, the series for the narrowly defined money
supply that now receives the most attention. I did experiment with other definitions
of the money supply and found that the equations were virtually identical. Two
variables were used for the output gap-the output gap based on Council of Eco-
nomic Advisers calculations (Y-Y*) and the unemployment rate (U). I used the
rate for males 20 and over to correct for demographic changes, though the correc-
tion mattered very little. The fiscal impact variables are scaled by GNP, and sup-
posed to represent budget deficits. I tried both changes in the straight budget deficit
divided by GNP and changes in the high employment deficit divided by GNP, found
that the latter had more believable coefficients, and, therefore, used it. It may
appear strange that inflation forecasters know enough to adjust the budget deficit for
cyclical variation, but in fact it may not be so peculiar. The unadjusted deficit can
rise when fiscal policy is expansionary (presumably raising expected inflation), or
when the economy is in recession (presumably lowering it when Y-Y* is not
controlled for), and its sign will be ambiguous a priori, whereas the full em-
ployment deficit should clearly have a positive sign. The shift dummies include a
price shock term, defined as the rate of change of the average of the export and
import price deflator as in Gordon [15], a wage-price controls dummy (one for
1971.III through 1972), and one variable suggested by the pattern of residuals a
dummy for when Republican presidents were in office. All equations were esti-
mated with a first-order serial correction procedure.
The ISR household survey is explained in Table 3. A shift dummy that is one in
the early qualitative years (QUAL) does work, implying that the Juster and Com-
ment adjustment procedure may have lowered inflation expectations slightly before
1966. The shock (SHK) and controls dummies (FRZ) also work in the expected
direction. The Republican president dummy has a consistent and strong negative
impact-other things equal, if a Republican president is in office, households
expect one point less inflation.
Regarding the variables more likely to be in an econometric model of the inflation
process, the current and past values of inflation consistently work, with the sum of
the lag coefficients equal to about 0.4. These lags extend six or eight quarters,
implying that a rise in actual inflation of one point raises expected inflation 0.4
points in about a year and a half. In addition, a one-point rise in the money supply
adds another 0.3 points. The wage change variable does not work very well, and
both versions of the output gap have the wrong sign. Both variables together
indicate that households do not appear to believe in a short-run Phillips curve,
perhaps one reason for the observed short-run insensitivity of inflation to unemploy-
ment rate changes. This supports a speculation recently made by Fischer and
Huizinga [11]. But the budget deficit clearly adds to explanatory power, even when
the money supply is included (eq. (7)). Whether deficits should have an effect on
inflation independent of that of the money supply, a controversial proposition, it is
clear that ISR households think they do. Finally, I note that the explanatory power
of the best inflation expectations equation (7) is quite good, the estimated coeffi-
cient of serial correction is rather low, and the standard error is fairly small, only
0.76 of a point of inflation.
The Livingston survey of economists is explained in Table 4. Monetary growth
works as before, and again wages are statistically insignificant. l l As with house-
l IThe results in equation (2) are similar to those of Gordon [ 15], though I have estimated the equation
to another five years of data.
TABLE 3
EQUATIONS EXPLAINING HOUSEHOLD EXPECTATIONS OF INFLATION, MEAN RESPONSE: QUARTERLY OBSER

(all rate variables in percentage terms at annual rates)
Independent
Variable ( 1 ) (2) (3) (4)
Constant 1.839 (2.8) 3.152 (2.7) 3.110 (6.2) 3.58

A(L)p* 3.544 (8.7) 0.390 (7.5) 0.377 (5.6) 0.370 (5.7) 0.41
B(L)m* 0.424 (8.0) 0.315 (6.4)
C(L)w* 0.088 (0.8)
U_1 0.188 (1.4)
(Y- Y*)_, -0.01
D(L)f*
REP - 1.127 (4.6) -0.806 (3.1) -1.178 (4.4) - 1.106 (4.6) - 1.12
FRZ -0.750 (1 4) -1.262 (2.5) -0.745 (1 5) -0.789 (1.6) -0.75
SHK 0.076 (4.1) 0.068 (3.8) 0.079 (4-1) 0.074 (3-9) 0.07
QUAL -1.968 (5.3) -1.028 (2.4) -1.878(4.0) -2.299 (5.3) -2.06
R2 0.851 0.886 0.855 0.864 0.854

SEE 0.850 0.816 0.860 0.848 0.856
Rho 0.305 0.234 0.295 0.272 O.297
NOTES: Absolute t ratios are in parentheses. For dlstributed lags only the sum of the coefficlents ls glven, with the absolute t ratlo for the sum. Lags ar
Included.
TABLE 4
EQUATIONS EXPLAINING ECONOMISTS EXPECTATIONS OF INFLATION, MEAN RESPONSE: SEMIANNUAL OBSE

(all rate variables in percentage terms at annual rates)
Independent
Varlable (1) (2) (3) (4) (
Constant 3.000 (0.2) -0.311 (0.8) 2.255 (0.1) 1.862 (0.1) 2.979 (
A(L)p* 0.344 (6.7) 0.570 (11.4) 0.329 (5.4) 0.374 (7 1) 0.340 (6
B(L)m* 0.276 (6.4) 0
C(L)W* 0.104 (1.0)
_ 1 0.217 (2.3)
(Y - Y*)- 1 -0.033 (0.7
r O. 104 (1.2) 0.0
J - 1
REP -0.264 (1.0) -0.292 (1.2) -0.246 (1.0) -0.177 (0 7) -0.220 (0

F2Z -0.197 (0.6) -0.044 (0.1) -0.112 (0.4) -0.177 (0.6) -0.189 (0
SHK 0.041 (3.3) 0.040 (2.9) 0.036 (2.7) 0.040 (3.3) 0.042 (3
R2 0.539 0.864 0.568 0.588 0.543

SEE 0.423 0.411 0.419 0.405 0.426
RhO 0.999 0.723 0.999 0.999 1.000
D-W 2.33 2.02 2.38 2.31 2930
NOTESS Absolute t ratios are in parentheses. For distributed lags only the sum of the coefficlents ls given, with the absolute t ratio for the sum. Lags
holds, both output gap terms have the wrong sign, indicating that economists are
like households in believing that neither cost-push forces nor Phillips curves can
explain expected inflation. But unlike households, economists have a good deal less
faith in government policy as an antidote for inflation: the wage-price freeze dummy
has much less impact, the budget deficit with or without the monetary variable has a
tiny impact, and even the dummy indicating the party of the president has a small and
insignificant coefficient. Note finally that the fit of the economists' equation is
much worse the R2 is lower and the coefficient of serial correlation much higher
than for households. The standard error is lower than for households, but only
because the variance of the Livingston survey is less and because the serial correla-
tion coefficient is explaining so much of the residual variance.
Table 1 showed that inflation expectations of households (pe) explained actual
inflation (P + I) better than did the expectations of economists. Tables 3 and 4 now
show that a common set of exogenous variables explains pe bewtter for households
than for economists. One explanation for the latter result could be that economists
are more up-to-date in the Lucas [26] sense. They may be more alert to economic
changes, and more inclined to alter their forecasting model either when inflation
changes or when the perceived goals of policy change. One way to test this hypoth-
esis is to conduct split-sample F tests for change in the regression coefficients. The
TABLE 5
EQUATIONS EXPLAINING EXPECTATIONS OF INFLATION, SPLIT PERIODS: 1956-70 AND 1970-80 (all rate
variables in percentage terms at annual rates)
Households Economists
Independent
Variable 1956 69 197s80 1956 69 197s80
Constant 0.722 (1.6) 3.587 (1.8) -0.021 (0.1) 1.009 (0 7)

A(L)p* 0.337 (4.2) 0.325 (4.0) 0.354 (4.8) 0.541 (5.5)
B(L)m* 0.407 (8.3) 0.214 (2.1) 0.230 (5.5) 0.230 (2.3)
f_l -0.017 (0.2) 0.689 (3.3)
REP -0.342 (1 1) -1.146 (1.8) -0.108 (0.5) -1.533 (3.0)
FRZ -1.349 (2.2) 0.017 (0.1)
SHK -0.021 (1.0) 0.046 (1.6) 0.076 (3.0) 0.053 (2.0)
R2 0.414 0.858 0.737 0.971

SEE 0.441 0.957 0.289 0.484
Rho 0.747 0.045 0.627 -0.104
F-statistic* 2.13 1.76
F critical value* 1.95 2.27
NQTES: Absolute t ratios are in parentheses. For distributed lags only the sum of the coefficlents is given, with the absolute t ratlo for the
sum. Lags are all for elght quarters.
*For shlfts in the regression coeEcients. If F is larger than the crltlcal values, we can reJect the null hypothesls that the coefflclents have
not changed with 95 percent conEldence.
results of these tests for the two series are shown in Table 5, with the period split at
the end of 1969. Before 1970 general levels of inflation were lower, and there may
have been some perception that the government was less prepared to tolerate infla-
tion. As can be seen, the tests indicate that the hypothesis that the coefficients have
not changed can be rejected for households but not for economists. 12 If anything, the
economists' forecasting model is more stable than the household model.
These expectations-determination results then contain suggestive evidence on
several points that have been debated in the inflation literature. For one thing, there
is only weak evidence that inflation expectations models shift over time; such is
only the case for households, and by an amount that is only barely statistically
significant. For another, there is very little expectations evidence in favor of either
cost-push or Phillips curve models of the inflation process. Further, there is evi-
dence that households think wage-price controls will lower inflation, but no evi-
dence that they think unemployment will lower inflation. This could explain both
the surprising (to economists) popularity of controls as an antidote to inflation in
Gallup polls, and the flat short term Phillips curve estimated by econometricians.
THE CREDIBILITY HYPOTHESIS
A final issue that can be investigated more carefully with explicit expectations
data is the credibility hypothesis advanced by Fellner [8]. His idea is that the
standard adaptive view is deficient in that it omits the unmeasurable influence of the
government's policy stance toward inflation. If the government were perceived to
be lax about fighting inflation, expectations of inflation would be shifted up; if the
government were perceived as willing to bear any social cost to root out inflation,
expectations would be shifted down.
There is no very good empirical test of this hypothesis, for the essence of it is that
it is intrinsically impossible for inflationary expectations to be characterized by tight
econometric formulations. But a practical procedure used by both Gramlich [17]
and Fellner [7] is to compare wage-equation residuals in periods of more or less
presumed government inflation-fighting resolve. It is obviously hard to identify
such periods because the government has always asserted that it cared about fighting
inflation, but comparisons of residuals in the late fifities (where there supposedly
was resolve) and the late seventies (where there supposedly was not) do indicate
weak support for the hypothesis the residuals are higher in the seventies, though
by only a fraction of a percentage point.
Table 6 tries to conduct more systematic tests with the expectations series used
here. Column (1) shows Fellner's annual residuals in a money-wage equation.
Column (2) shows the annual average residuals from the best-fitting equation for
households, and column (3) shows the annual average residuals from the best-fitting
equation for economists. Both survey residuals are before serial correction, that is,
pe-Z where fi refers to the coefficient vector shown in Tables 3 and 4.
l2This test was supplemented with a series of tests experimenting with earlier and later breakpoints.
The results consistently suggest that households have changed their forecasting model sometime in the
late seventies, while economists have not. The F-statistic is barely larger than the critical value when the
breakpoint is 1966-the point at which the ISR series switched from qualitative to quantitative data
implying that measurement differences do not explain the finding.
Various types of residual statistics are shown the overall average, the average
before and after 1970, and the average in the four recession years (1958, 1961,
1971, and 1975). In addition, the table gives the matrix of simple correlation
coefficients between the series, to see if common patterns can be identified. Those
TABLE 6
EQUATION RESIDUALS, 1 95S79: ANNUAL PERCENTAGE RATES OF

CHANGE
(1) (2) (3)

Money Wages ISR Households Llvingston Economists
Year (Fellner [7J) (Table 3, Eq (7)) (Table 4, Eq (2))
1956 0.6 -0.3 0.2

1957 0.7 -0.5 -0.5
1958 -0.5 -0.2 -0.7
1959 -0.3 0.2 0.2
1960 0.1 0.5 0.4
1961 -0.1 0.3 0.3
1962 0.3 0.1 0.2
1963 -0.2 0.1 -0.2
1964 -0.5 o -0.3
1965 -0.4 o -0.5
1966 -0.2 -0.4 -0.3
1967 -0.5 0+2 o
1968 0.1 -1 1. -0.7
1969 -0.5 -0.6 -0.6
1970 -0.2 0.4 -0.4
1971 0.3 0.2 -0.3
1972 o 0.1 -0.1
1973 o -0.4 -0.5
1974 1.3 0.7 -0.4
1975 0.6 0.2 -0.7
1976 -1.1 o 0.7
1977 0.3 0.3 0.8
1978 0.6 0.7 0.3
1979 1.2 0.8
Average 0.10 0.07 -0.09
Average (1956-69) 0.29 -0.12 -0.18
Average (1970-79) 0.20 0.34 0.02
Average (recessions) 0.07 0.12 -0.33
Correlation coefficient
(with col. 2)* 0.138
Correlation coefficient
(with col. 3)* -0.076 0.372
NOTE: Before serlal correctlon

FFrom 1956 to 1978
correlation coefficients should be interpreted with some care: those at the bottom of
column 1 are correlations between residuals in an equation explaining wage infla-
tion and residuals in an equation explaining price inflation expectations.
While the residuals behave mainly like random residuals, Fellner's tests actually
work better with the survey data than with the wage residuals. He attempted to show
first that wage residuals have risen in the seventies, a fact that is not true once 1954
and 1955 are dropped from the sample (he included them, but I dropped them in
Table 6 to show common periods). He also suggested that recession residuals would
be negative, if feelings about the commitment to full employment were devalued.
This proposition is not true for the period as a whole, though it is true for the early-
recession wage residuals.
Both expectations surveys do show a higher average residual in the inflationary
decade of the seventies, hence supporting Fellner's claim. The shift is not dramatic,
but it is noticeable. Moreover, at least the economist survey shows negative re-
siduals in recessions (we have already seen that recessions appear to have no effect
on household expectations of inflation), and particularly in the 1958 recession.
Finally, for what it is worth, there is a stronger correlation between the survey
residuals than between either one with the wage residuals. As before, no striking
conclusions are shown by these residuals they are residuals and any influence that
is easy to capture is already in the regression. But there is some very slight sug-
gestion, more noticeable with survey data than with wage data, that inflation expec-
tations are shifting up over time in a way that is not completely captured by the rest
of the equation.
CONCLUSION
This comparison of household and economist expectations of inflation has turned

up several interesting facts. Looking at mean survey responses, the rationality
hypothesis appears to be rather decisively rejectedxpectations of inflation appear
to be both biased and inefficient. If anything, they appear to be more biased and
inefficient for economists than for households. Moreover, the forecasts predict
inflation slightly worse for economists than for households.
The second part of the paper then looks at how inflation expectations are set.
Both economists and households are strongly influenced by current and past infla-
tion rates and current and past rates of growth of the money supply. Households are
additionally influenced by budget deficits (which are seen to raise inflation), the
existence of a Republican president, and wage-price controls (which are seen to
lower it). Economists find none of these latter variables to be significant. A summa-
ry that only oversimplifies slightly is that households believe government policy
(budget deficits, controls) can influence inflation, while economists, who are closer
to the setting of government anti-inflation policy, have less faith in it.
LITERATURE CITED
1. Cagan, Phillip. "The Monetary Dynamics of Hyperinflation." In Studies in the Quantity

Theory of Money, edited by Milton Friedman, pp. 25-117. Chicago: University of
Chicago Press, 1956.
2. Carlson, John A. "A Study of Price Forecasts." Annals of Economic and Social Mea-
surement, 6 (Winter 1977), 27-56.
3. Curtin, Richard T. "Consumer Perceptions of Inflation and Expectations." Institute for

Social Research Working Paper, The University of Michigan, 1980.
4. de Leeuw, Frank, and Michael J. McKelvey. "Price Expectations of Business Firms."

Brookings Papers on Economic Activity, 1 ( 1 98 1 ), 299-3 1 4.
5. de Menil, George, and Surjit S. Bhalla. "Direct Measurement of Popular Price Expecta-
tions." American Economic Review, 65 (March 1975), 169-80.
6. Elliot, Jan W. "Measuring the Expected Real Rate of Interest: An Exploration of

Macroeconomic Alternatives." American Economic Review, 67 (June 1977), 429-44.
7. Fellner, William. "The Credibility Effect and Rational Expectations: Implications of the
Gramlich Study." Brookings Papers on Economic Activity, 1 (1979), 167-90.
8. . "The Valid Core of the Rationality Hypothesis in the Theory of Expectations."
Journal of Money, Credit, and Banking, 12 (November 1980, Part 2), 763-87.
9. Figlewski, Stephen, and Paul A. Wachtel. "The Formation of Inflationary Expecta-
tions." Review of Economics and Statistics, 63 (February 1981), 1-10.
10. Fischer, Stanley, "Long-Term Contracts, Rational Expectations, and the Optimal Mon-
ey Supply Rule." Journal of Political Economy, 85 (February 1977), 191-206.
11. Fischer, Stanley, and John Huizinga. "Inflation, Unemployment, and Public Opinion
Polls." Journal of Money, Credit, and Banking} 14 (February 1982), 1-19.
12. Friedman, Benjamin M. "Optimal Expectations and the Extreme Information Assump-
tions of Rational Expectations Macromodels." Journal of Monetary Economics, S (Jan-
uary 1979), 23-42.
13. . "Survey Evidence on the Rationality of Interest Rate Expectations." Journal of

Monetary Economics, 6 (October 1980), 453-65.
14. Gibson, William E. "Interest Rates and Inflationary Expectations: New Evidence."
American Economic Review, 62 (December 1972), 854-65.
15. Gordon, Robert J. "New Evidence that Fully Anticipated Monetary Changes Influence
Real Output After All." National Bureau of Economic Research Working Paper, 1979.
16. . "Inflation in Recession and Recovery." Brookings Papers on Economic Ac-
tivity, 1 (1971), 105-66.
17. Gramlich, Edward M. "Macro Policy Responses to Price Shocks." Brookings Papers
on Economic Activity, 1 (1979), 125-66.
18. Grossman, Jacob. "The Rationality of Money Supply Expectations and the Short-Run
Response of Interest Rates to Monetary Surprises." Journal of Money, Credit, and
Banking, 8 (November 1981), 409-24.
19. Hendershott, Patric H., and James C. Van Horne. "Measuring the Expected Real Rate
of Interest: An Exploration of Macroeconomic Alternatives." Journal of Finance, 28
(May 1973), 301-14.
20. Jacobs, Rodney L., and Robert A. Jones. "Price Expectations in the United States,
1947-1975. " American Economic Review, 70 (June 1980), 269-77.
21. Jonung, Lars. "Perceived and Expected Rates of Inflation: A Note on Sweden." Ameri-
can economlc Kevlew, ln press.
_l . . . .
22. Juster, F. Thomas, and Robert Comment. "A Note on the Measurement of Price
Expectations." Institute for Social Research Working Paper, The University of Michi-
gan, 1980.
23. Leonard, Jonathan S. "Wage Expectations in the Labor Market: Survey Evidence on
Rationality." National Bureau of Research Working Paper, 1980.
24. Ljung, G. M., and George E. P. Box. "On a Measure of Lack of Fit in Time Series
Models." Biometrika, 65 (August 1978), 297-303.
25. Lucas, Robert E., Jr. "Some International Evidence on Output, Inflation Tradeoffs."
American Economic Review, 63 (June 1973), 326-34.
26. . "Econometric Policy Evaluation: A Critique." In The Phillips Curve and
Labor Markets, edited by Karl Brunner and Allan H. Meltzer, pp. 19-46. The Carnegie-
Rochester Conference Series, Vol. 1. Amsterdam: North-Holland, 1976.
27. Mishkin, Frederic S. "Are Market Forecasts Rational?" American Economic Review,
71 (June 1981), 295-306.
28. Mullineaux, Donald J. "Inflation Expectations and Money Growth in the United
States. " American Economic Review, 70 (March 1980), 149-61.
29. Muth, John F. "Rational Expectations and the Theory of Price Movements." Econo-
metrica, 29 (July 1961), 315-35.
30. Pearce, Douglas K. "Comparing Survey and Rational Measures of Expected Inflation:
Forecast Performance and Interest Rate Effects." Journal of Money, Credit, and Bank-
ing, 11 (November 1979), 447-56.
31. Pesando, James E. "A Note on the Rationality of the Livingston Price Expectations."
Journal of Political Economy, 83 (August 1975), 849-58.
32. Phelps, Edmund S., and John B. Taylor. "Stabilizing Powers of Monetary Policy Under
Rational Expectations." Journal of Political Economy, 85 (February 1977), 163-90.
33. Theil, Henri. Applied Economic Forecasting. Amsterdam: North-Holland, 1966.
34. Turnovsky, Stephen J., and Michael J. Wachter. "A Test of the 'Expectations Hypoth-
esis' Using Directly Observed Wage and Price Expectations." Review of Economics and
Statistics, 54 (February 1972), 47-54.
35. Van Duyne, Carl. "Food Prices, Expectations, and Inflation." American Journal of
Agricultural Economics, 64 (August 1 982), 4 1 9-30.
36. Wachtel, Paul A. "Survey Measures of Expected Inflation and Their Potential Useful-
ness." In Analysis of Inflation: 1965-1974, edited by Joel Popkin, pp. 361-95.
Cambridge, Mass.: National Bureau of Economic Research, 1977.

Wiley, Ohio State University Press Journal of Money, Credit and Banking

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Wiley, Ohio State University Press Journal of Money, Credit and Banking

Uploaded by

Copyright:

Available Formats

Models of Inflation Expectations Formation: A Comparison of Household and Economist

Models of Inflation Expectations Formation

A Comparison of Household and Economist Forecasts

THE RECENT APPRECIATION of the critical role played by

an ear ler verslon.

EDWARD M. GRAMLICH is director, Institute of Public Policy Studies, University of

A GENERAL MODEL OF INFLATION EXPECTATIONS

where P+ 1 is the rate of inflation in period t + 1 and pe iS the expected rate of

P+1 = ao + alpe + u . (2)

pe iS an unbiased predictor of future inflation rates when the null hypothesis

Ho (aOSa 1 ) = (oS 1 ) (3)

is not rejected. It is an efficient predictor when there is no serial correlation of

with the weights decaying geometrically according to the parameter (1-bo).

pe _ pe 1 = bo(p-pe 1) + bl(p-P- 1) -b2(P-P) 5 (6)

where bl is an extrapolation coefficient applied to the change in the inflation rate

where Z is a vector of variables plausibly related to inflation-current and past rates

given the strong degree of autocorrelation in many time series, however, it is

p=cO+m- d(Y-Y*), (10)

r - Y* = C1(P - pe) + c2(Y r )-1 * (ll)

p = CO + m-C1(P-pe) + (1 -c2)(Y-Y*)_l (12)

and, in terms of expectations,

DATA ON INFLATIONARY EXPECTATIONS

TESTS OF THE RATIONAL EXPECTATIONS HYPOTHESIS

TESTS OF THE RATIONAL EXPECTATIONS FORECASTING HYPOTHESIS: P+ l = aO + a]Pe + U (inflatiOn

Households Economists Business*

Statistic 195S80 197F80 195S80 197S80 197S80

NO COrreCtiOn fOr Seria1 COrre1atiOn

COrreCtiOn fOr Seria1 COrre1atiOn

aO 1.999 5.038 1.557 3.347

NOTE: Absolute t ratios for aO around 0 and al around I are in parentheses.

Mean Root Mean U-Statistic, U-Statlstlc,

A11 households 3.68 3.79 0.09 12.44

That noneconomists seems to forecast inflation slightly more rationally, and

THE FORMATION OF INFLATION EXPECTATIONS

pe = f(A(L)p,B(L)m, C(L)w,D(L)f, (Y-Y* ) ,S) , ( 14)

EQUATIONS EXPLAINING HOUSEHOLD EXPECTATIONS OF INFLATION, MEAN RESPONSE: QUARTERLY OBSER

Constant 1.839 (2.8) 3.152 (2.7) 3.110 (6.2) 3.58

R2 0.851 0.886 0.855 0.864 0.854

EQUATIONS EXPLAINING ECONOMISTS EXPECTATIONS OF INFLATION, MEAN RESPONSE: SEMIANNUAL OBSE

REP -0.264 (1.0) -0.292 (1.2) -0.246 (1.0) -0.177 (0 7) -0.220 (0

R2 0.539 0.864 0.568 0.588 0.543

Constant 0.722 (1.6) 3.587 (1.8) -0.021 (0.1) 1.009 (0 7)

R2 0.414 0.858 0.737 0.971

THE CREDIBILITY HYPOTHESIS

EQUATION RESIDUALS, 1 95S79: ANNUAL PERCENTAGE RATES OF

(1) (2) (3)

1956 0.6 -0.3 0.2

NOTE: Before serlal correctlon

This comparison of household and economist expectations of inflation has turned

1. Cagan, Phillip. "The Monetary Dynamics of Hyperinflation." In Studies in the Quantity

3. Curtin, Richard T. "Consumer Perceptions of Inflation and Expectations." Institute for

4. de Leeuw, Frank, and Michael J. McKelvey. "Price Expectations of Business Firms."

6. Elliot, Jan W. "Measuring the Expected Real Rate of Interest: An Exploration of

13. . "Survey Evidence on the Rationality of Interest Rate Expectations." Journal of

You might also like