Modeling inflation expectations in Mexico: a perspective through bayesian inference
Keywords:
Inflation expectations, Bayesian inference, Monetary policyAbstract
It is acknowledged that inflation expectations significantly influence economic decisions. In Mexico, economic stability has been affected by the widespread increase in prices, stemming from disruptions in global trade of commodities and energy. This work introduces an innovation by employing decision theory, incorporating inflation expectations from experts to forecast price trends in complex scenarios, which serves as the foundation for developing a Bayesian inference model. The results suggest that inflation may remain elevated due to external factors and distrust in monetary policy. Consequently, the importance of the subjective expectations of economic agents in the formulation of monetary policies is emphasized, with the aim of stabilizing the inflation rate and maintaining credibility in the current macroeconomic context.
JEL Classification: C11, C53, D84,E31, E37, E52
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