However, using lagged inflation as a proxy for inflation expectations has drawbacks, notably its susceptibility to the Lucas critique. 4 The staff consequently analyzes a number of survey measures of inflation expectations. One question in choosing among measures of expectations is whether to focus on measures of short-term inflation expectations (say, twelve months ahead) or of longer-term expectations (five to ten years ahead).
Alan Bollard: The implications of the Canterbury earthquakes for the Reserve Bank Opinion piece by Dr Alan Bollard, Governor of the Reserve Bank of New Zealand, at the implications of the Canterbury earthquakes for the Reserve Bank, 13 May 2011.