Rationality and seasonality: Evidence from inflation forecasts

- The study examines the seasonal pattern in expectations.
- We use Israeli survey forecasts of quarterly inflation without seasonal adjustment.
- Rationality is tested with respect to (trivial) information about calendar quarter.
- We find significant prediction biases, which differ across calendar quarters.
- Seasonal bias is strongest at shorter horizons and in a low inflation environment.

We examine the seasonal pattern in expectations, using a unique Israeli survey of quarterly inflation forecasts. Rationality is rejected with respect to (trivial) information about calendar quarter. Seasonal bias is strongest at shorter horizons and in a low inflation environment.