Learning-through-Survey in Inflation Expectations

Understanding Consumer Inflation Expectations during the COVID‐19 Pandemic

“…Accordingly, stayers assign a wider range of possible outcomes to future inflation three years from now. This is of particular interest, as in general, tenure leads to smaller uncertainty about future inflation (for brevity not shown here, see also Kim and Binder 2021 ). At the same time, we have seen in Section 3.2 that stayers are not significantly affected by containment policies on their inflation expectations at the 3‐year horizon.…”

“…This may reflect individuals' expectations that these measures would lead to a faster economic and, therefore, faster inflation recovery. Although not reported due to space constraints, the tenure fixed effects also indicate that the mean inflation expectations are lower for participants who stay in the survey for a longer period, suggesting that participants learn from their past participation in the survey and may pay more attention to inflation news and data (Kim and Binder 2021 ).…”

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“…Related to concerns over relevancy and the potential for social desirability bias, Kim and Binder (2020) find significant panel conditioning effects for both household and firm inflation expectations.…”

Talking Over Time ‐ Dynamic Central Bank Communication

“…As Coibion et al. (2020), Binder and Kim (Forthcoming), and many others show, most firms and households do not incorporate information provided by the CB into their expectations. A dynamic economic environment, however, introduces a discrepancy between the interests of Wall Street and Main Street: the future economy is relevant for the returns of the former, while financial constraints and discounting of the future limit the latter's focus to the present.…”