What determines households inflation expectations? Theory and evidence from a household survey

Easaw, Joshy; Golinelli, Roberto; Malgarini, Marco

doi:10.1016/j.euroecorev.2013.02.009

Cited by 44 publications

(36 citation statements)

References 27 publications

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“…Our results are also consistent with the information rigidity hypothesis, which suggests that households' private information sets (through news) play a role in explaining disagreements in inflation expectations (Mankiw and Reis, 2002;Madeira and Zafar, 2015). Model 2 confirms results in the earlier literature that households with different demographic backgrounds disagree on inflation expectations, see, for example, Bryan and Venkatu (2001a,b) for the US, Blanchflower and MacCoille (2009) for the UK, Easaw et al (2013) for Italy, and Jonung (1981) for Sweden. Households with different demographics may purchase different consumption bundles.…”

Section: The First Sub-sample-january 1978 To September 1983supporting

confidence: 80%

The Impact of News on US Household Inflation Expectations

et al. 2017

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Analysis of monthly disaggregated data from 1978 to 2016 on US household inflation expectations reveals that exposure to news on inflation and monetary policy helps to explain inflation expectations. This remains true when controlling for household personal characteristics, their perceptions of the effectiveness of government policies, their expectations of future interest rates and unemployment, and their sentiment levels. We find evidence of an asymmetric impact of news on inflation expectations particularly after 1983, with news on rising inflation and easier monetary policy having a stronger effect in comparison to news on lowering inflation and tightening monetary policy.

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Section: The First Sub-sample-january 1978 To September 1983supporting

confidence: 80%

The Impact of News on US Household Inflation Expectations

et al. 2017

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“…Lamla and Maag (2012) analyze the effect of media reporting on disagreement among forecasters, and find professional forecaster disagreement to be unaffected by media coverage, whereas disagreement among households increases with higher and more diverse media coverage. Pfajfar and Santoro (2009) provide evidence that the effect of news on inflation expectations differs across socioeconomic groups, and Easaw, Golinelli, and Malgarini (2013) demonstrate that the rate at which professional forecasts are embodied in households' expectations depends on socioeconomic characteristics. Finally, Pfajfar and Santoro (2013) highlight the importance of differentiating between media reporting on inflation and whether a consumer has actually heard news about prices.…”

Section: Introductionmentioning

confidence: 99%

Consumers' Attitudes and Their Inflation Expectations

Ehrmann

Pfajfar²,

Santoro

2015

SSRN Journal

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This paper studies consumers' inflation expectations using micro-level data from the University of Michigan's Surveys of Consumers. It shows that beyond the well-established socioeconomic factors such as income, age, or gender, inflation expectations are also related to respondents' financial situation, their purchasing attitudes, and their expectations about the macroeconomy. Respondents with current or expected financial difficulties and those with pessimistic attitudes about major purchases, income developments, or unemployment have a stronger upward bias than other households. However, their bias shrinks by more than that of the average household in response to increasing media reporting about inflation.

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“…Lamla and Maag (2012) analyze the e¤ect of media reporting on disagreement among forecasters, and …nd professional forecaster disagreement to be una¤ected by media coverage, whereas disagreement among households increases with higher and more diverse media coverage. Pfajfar and Santoro (2009) provide evidence that the e¤ect of news on in ‡ation expectations di¤ers across socio-economic groups, and Easaw, Golinelli, and Malgarini (2013) demonstrate that the rate at which professional forecasts are embodied in households' expectations depends on socio-economic characteristics. Finally, Pfajfar and Santoro (2013) highlight the importance of di¤erentiating between media reporting on in ‡ation and whether a consumer has actually heard news about prices.…”

Section: Introductionmentioning

confidence: 99%

Consumers' Attitudes and Their Inflation Expectations

Ehrmann

Pfajfar

Santoro

2015

FEDS

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This paper studies consumers'in ‡ation expectations using micro-level data from the Surveys of Consumers conducted by University of Michigan. It shows that beyond the well-established socio-economic factors such as income, age or gender, other characteristics such as the households'…nancial situation and their purchasing attitudes are important determinants of their forecast accuracy. Respondents with current or expected …nancial di¢ culties, pessimistic attitudes about major purchases, or expectations that income will go down in the future have a stronger upward bias in their expectations than other households. However, their bias shrinks by more than that of the average household in response to increasing media reporting about in ‡ation. Equivalent results are found during recessions.JEL classi…cation: C53, D84, E31

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What determines households inflation expectations? Theory and evidence from a household survey

Cited by 44 publications

References 27 publications

The Impact of News on US Household Inflation Expectations

The Impact of News on US Household Inflation Expectations

Consumers' Attitudes and Their Inflation Expectations

Consumers' Attitudes and Their Inflation Expectations

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