An Economist Takes a Survey of People on the Street

Essay

An economist takes a survey of people on the street and asks them for forecasts of inflation over the next year.He takes this survey every month for several years,and finds that people's forecasts of inflation are biased.People seem to make systematic errors in forecasting inflation.Also,their forecast errors are correlated: if their forecast was too high one month,it also tended to be too high the next month.Is this evidence against rational expectations?