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This paper analyzes the public's perceptions of macroeconomic policy during the Bush presidency. It links the public's view of President Bush's performance with respect to unemployment and inflation to the actual behavior of unemployment and inflation and the public's expectations of their future behavior. We find that both the level of unemployment and the expected change in unemployment significantly influenced the public's perception of the president's performance. Inflation and expectations about inflation did not play an important role.

This paper introduces survey-based measures of expectations and uncertainties about income and real interest rates into an otherwise conventional consumption function. The survey dat a contribute more than conventional variables to the explanation of changes in consumption. The hypothesis that consumption follows a random walk is rejected in favor of a model in which consumption responds with a lag to changes in expected income growth. The significance of inflation in earlier estimates of the U.S. consumpti on function is shown to be spurious and due to a strong negative correlation between expected inflation and expected income growth. Copyright 1992 by MIT Press.

This paper tests the rationality of forecasts made by individuals who contribute to the Blue Chip consensus forecasting service and tries, by means of a questionnaire on forecasting methods, to establish why some forecasters appear more rational than others. Tests based on consensus forecasts prove unreliable as guides to the number of individuals who produce rational forecasts. Individual forecasts are more likely to be rational if they are based on a mainstream economic theory and incorporate a substantial element of judgment. Copyright 1991 by Ohio State University Press.

It is now common for theoretical analyses of macroeconomic policy to assume that the public's social preferences between inflation and unemployment may be represented by an indifference map that is concave to the origin and most assume that the functional form is quadratic.' We estimate such a quadratic social preference function. We proxy public satisfaction by the public's rating of presidential performance using Gallup Poll data.2 Such data have been widely used by both economists and political scientists in analyses of the economic and non-economic determinants of presidential popularity.3 As we have found [33] that over the period 1953 to 1988 there have been structural shifts in the relationship between presidential popularity and inflation and unemployment we limit our analysis to only one presidency, the Reagan administration.

The accuracy of forecasts of interest rates over different forecast horizons and time periods is examined. The results indicate a deterioration in “absolute” forecast accuracy measured by the mean absolute error and the root mean squared error but no decrease in “relative” accuracy measured by the Theil coefficient with an increase in the forecast span. The results also indicate a decline in accuracy in periods of volatile interest rates. Support is found for the hypothesis that the ratio of the variability of predicted changes to that of actual changes falls with an increase in the forecast horizon.

In a recent article in this Journal} Gramlich (1983) concluded that the mean inflation forecasts from the University of Michigan Survey Research Center (SRC) surveys of households were, in the years 1956-1980, more accurate and more rational than the mean inflation forecasts from Livingston's Philadelphia Inquirer surveys of professional economists. These paradoxical Elndings have proved robust with respect to improvements in testing procedures (Bryan and Gavin 1986a, 1 986b). The purpose of this note is not to cast doubt on the result themselves, but to urge caution in their interpretation. With respect to forecast accuracy, we show that while the average forecast from the SRC is indeed more accurate than the average forecast from the Livingston survey, the forecast of a typical household is much less accurate than that of a typical economist. The apparent superiority of the SRC survey is entirely due to its larger