Anchoring of Consumers’ Inflation Expectations: Evidence from Microdata

Abstract

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Inflation Expectations and Consumption Expenditure

“…Ichiue and Nishiguchi (2013) find that Japanese households that expect higher inflation plan to decrease their future consumption spending, but have increased their spending in the past. Other papers that use micro survey data from the MSC are Souleles (2004), who studies the rationality of consumer expectations, Piazzesi and Schneider (2009), who study momentum trading in housing markets, Malmendier and Nagel (2009), who show that personal experiences determine inflation expectations, Dräger and Lamla (2013), who study the anchoring of inflation expectations, and Carvalho and Nechio (2014), who document that a set of households form expectations consistent with a Taylor rule. Coibion and Gorodnichenko (2012) study the effect of macroeconomic shocks on forecast errors in the MSC and provide evidence consistent with models of informational rigidities.…”

The Evolution of the Anchoring of Inflation Expectations

“…the link between short-term and long-term expectations. By using micro panel data for US consumer inflation expectations from the Michigan survey, Drager and Lamla (2013) find that long-run inflation expectations have become more anchored over the last two decades, identifying as a turning point the preemptive tightening adopted by former Fed Chairman Alan Greenspan after 1996. Gefang, Koop and Potter (2008) used US and UK financial-market-based data from 2003 to 2008 and found, for both countries, evidence of a 'contained' pass-through of inflation expectations, meaning that medium-term expectations do respond to movements in actual inflation, but remain within a narrow range around the central bank's policy target.…”

Inflation Expectations and Readiness to Spend: Cross-Sectional Evidence

“…A recent paper by Carvalho and Nechio (2014) uses the Michigan Survey data to test whether agents understand Taylor rules. Finally, Dräger and Lamla (2013) use the Michigan inflation expectation data to study the anchoring of inflation expectations both in the cross-section and over time.…”