Backward-looking behavior more relevant than rational expectations in inflation predictions.
The study looked at how well a certain economic model fits with real-world data from euro zone countries, the US, and the UK. Instead of assuming people always make rational predictions about inflation, the researchers used actual survey data on what experts think will happen. They found that looking at past trends is more important than looking ahead for most countries. And when they used the survey data, they saw that inflation goes up when the economy is doing well.