A1849
Title: Aggregate disagreement
Authors: Paul Labonne - BI Business School (Norway) [presenting]
Jamie Cross - Melbourne Business School (Australia)
Abstract: Expectations are a key determinant of economic fluctuations and as such an important target for central bankers. In the wake of the recent inflation surge, studies using micro-survey data have tried to explain why economic agents diverge in their expectations. But surprisingly there has been little empirical work to understand if heterogeneous expectations at the micro level actually lead to heterogeneity at the macro level. To answer this question, the concept of aggregate disagreement is introduced, which refers to the emergence of multiple modes in the distribution of expectations. It is argued that aggregate disagreement and dispersion are two concepts essentially different with potentially contrasting economic ramifications. Using a Bayesian approach specifically suited for this task, modal features are explored in economic expectations and track aggregate disagreement over time. It is then studied the potential determinants of aggregate disagreement such as oil price shocks.
