Survey Expectations, Rationality and the Dynamics of Euro Area Inflation
AbstractThis paper uses survey data in order to analyse and assess the empirical properties of consumers’ inflation expectations in the euro area and explores their role in explaining the observed dynamics of inflation. The probability approach is used to derive quantitative estimates of euro area inflation expectations from the qualitative data from the European Commission’s Consumer Survey. The paper subsequently analyses the empirical properties of the estimated inflation expectations by considering the extent to which they fulfil some of the necessary conditions for rationality. The results suggest an intermediate form of rationality. In particular, the surveyed expectations are an unbiased predictor of future price developments and they incorporate – though not always completely – the information contained in a broad set of macroeconomic variables. In addition, although persistent deviations between consumers’ expectations and the rational outcome have occurred, consumers are shown to rationally adjust their expectations in order to eventually “weed out” any systematic expectational errors...
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by OECD Publishing,CIRET in its journal Journal of Business Cycle Measurement and Analysis.
Volume (Year): 2004 (2004)
Issue (Month): 1 ()
Inflation Expectations; Surveys; Rationality; Hybrid Phillips Curves; Euro Area;
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Magdalena Szyszko, 2011.
"The interdependences of central bank’s forecasts and economic agents inflation expectations.Empirical study,"
National Bank of Poland Working Papers
105, National Bank of Poland, Economic Institute.
- Magdalena Szyszko, 2013. "The interdependences of central bank’s forecasts and inflation expectations of consumers," Bank i Kredyt, National Bank of Poland, Economic Institute, vol. 44(1), pages 33-66.
- Konstantins Benkovskis, 2008. "The Role of Inflation Expectations in the New EU Member States: Consumer Survey Based Results," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 58(07-08), pages 298-317, Oktober.
- Tomasz Lyziak, 2010.
"Measuring consumer inflation expectations in Europe and examining their forward-lookingness,"
IFC Bulletins chapters,
in: Bank for International Settlements (ed.), The IFC's contribution to the 57th ISI Session, Durban, August 2009, volume 33, pages 155-201
Bank for International Settlements.
- Lyziak, Tomasz, 2009. "Measuring consumer inflation expectations in Europe and examining their forward-lookingness," MPRA Paper 18890, University Library of Munich, Germany.
- Maurizio Bovi, 2005.
"Consumers Sentiment and Cognitive Macroeconometrics Paradoxes and Explanations,"
- Maurizio Bovi, 2006. "Consumers Sentiment and Cognitive Macroeconometrics Paradoxes and Explanations," ISAE Working Papers 66, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
- Sarah M. Lein & Thomas Maag, 2008.
"The Formation of Inflation Perceptions – Some Empirical Facts for European Countries,"
KOF Working papers
08-204, KOF Swiss Economic Institute, ETH Zurich.
- Sarah M. Lein & Thomas Maag, 2011. "The Formation Of Inflation Perceptions: Some Empirical Facts For European Countries," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(2), pages 155-188, 05.
- Jang, Tae-Seok & Sacht, Stephen, 2012.
"Identification of Animal Spirits in a Bounded Rationality Model: An Application to the Euro Area,"
37399, University Library of Munich, Germany.
- Jang, Tae-Seok & Sacht, Stephen, 2012. "Identification of animal spirits in a bounded rationality model: An application to the euro area," Economics Working Papers 2012-12, Christian-Albrechts-University of Kiel, Department of Economics.
- Sacht, Stephen & Jang, Tae-Seok, 2012. "Identification of Animal Spirits in a Bounded Rationality Model: An Application to the Euro Area," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62071, Verein für Socialpolitik / German Economic Association.
- Gabriele Galati & Peter Heemeijer & Richhild Moessner, 2011.
"How do inflation expectations form? New insights from a high-frequency survey,"
DNB Working Papers
283, Netherlands Central Bank, Research Department.
- Gabriele Galati & Peter Heemeijer & Richhild Moessner, 2011. "How do inflation expectations form? New insights from a high-frequency survey," BIS Working Papers 349, Bank for International Settlements.
- Tomasz Łyziak, 2013.
"Non-Positive Scaling Factor in Probability Quantification Methods: Deriving Consumer Inflation Perceptions and Expectations in the Whole Euro Area and Ireland,"
Comparative Economic Studies,
Palgrave Macmillan, vol. 55(1), pages 77-98, March.
- Lyziak, Tomasz, 2011. "Non-positive scaling factor in probability quantification methods: deriving consumer inflation perceptions and expectations in the whole euro area and Ireland," MPRA Paper 28900, University Library of Munich, Germany.
- Kajal Lahiri & Yongchen Zhao, 2013. "Quantifying Heterogeneous Survey Expectations: The Carlson-Parkin Method Revisited," Discussion Papers 13-08, University at Albany, SUNY, Department of Economics.
- Ivo J.M. Arnold & Jan J.G. Lemmen, 2008.
"Inflation Expectations and Inflation Uncertainty in the Eurozone: Evidence from Survey Data,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer, vol. 144(2), pages 325-346, July.
- Ivo J. M. Arnold & Jan J.G. Lemmen, 2006. "Inflation Expectations and Inflation Uncertainty in the Eurozone: Evidence from Survey Data," CESifo Working Paper Series 1667, CESifo Group Munich.
- Jan Marc Berk & Gerbert Hebbink, 2006. "The anchoring of European inflation expectations," DNB Working Papers 116, Netherlands Central Bank, Research Department.
- Michael J. Lamla & Sarah M. Lein, 2010. "The Euro Cash Changeover, Inflation Perceptions and the Media," KOF Working papers 10-254, KOF Swiss Economic Institute, ETH Zurich.
- Martina Basarac & Blanka Škrabiæ & Petar Soriæ, 2011. "The Hybrid Phillips Curve: Empirical Evidence from Transition Economies," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(4), pages 367-383, August.
- Thomas Maag, 2009. "On the Accuracy of the Probability Method for Quantifying Beliefs about Inflation," KOF Working papers 09-230, KOF Swiss Economic Institute, ETH Zurich.
- Bovi, Maurizio, 2013. "Are the representative agent’s beliefs based on efficient econometric models?," Journal of Economic Dynamics and Control, Elsevier, vol. 37(3), pages 633-648.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.