New study reveals how inflation expectations drive U.S. economic volatility
The article introduces a new way to predict inflation by using a simple model that mimics how people make predictions in real life. By adjusting the model to include both long-term and short-term changes in inflation, the researchers found that the model can accurately predict how inflation will change over time. This model can help us understand why inflation rates can vary a lot and can even predict future inflation levels based on current data.