Differential interpretation of information in inflation forecasts

We test the hypothesis associated with a standard assumption in the theoret ical literature on learning: that economic agents interpret information ide ntically. We use a data set based on a survey of Israeli business executive s forecasting future inflation. One of the main advantages of using this da ta is that a major change in the inflation regime in 1985 can be treated as a natural experiment in new beliefs formation. We develop a methodology fo r testing this hypothesis and find evidence that is inconsistent with the i dentical-interpretation hypothesis, but is consistent with the proposed alt ernative.