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Searching for the Best Inflation Forecasters within a Consumer Perceptions Survey: Microdata Evidence from Chile

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  • Carlos Medel

Abstract

The aim of this article is to evaluate quantitative inflation forecasts for the Chilean economy taking advantage of a specific survey of consumer perceptions at the individual microdata level which, at the same time, is linked to a survey of employment in Chile’s capital city. Thus, it is possible to link, with no error, consumer perceptions and 12-month-ahead inflation forecasts with personal characteristics such as gender, age, educational level, county of living, and the economic sector in which they are currently working. By using a sample ranging from 2005.III to 2018.IV, the results suggest that women aged between 35 and 65 years old, with a college degree, living in the Northeastern part of Santiago, and working in Commonality and Public Services sector are the best forecasters. Men aged between 35 and 65 years old, with a college degree, in a tie living in the North-eastern and South-eastern zones but working in Government and Financial Services and Commerce Services sectors respectively, come in second place. Some econometric exercises reinforce and give more support to the winner inflation factor, and reveal that a factor different to the second-best in terms of forecast accuracy displays the characteristics required of a forecasting variable. Remarkably, this factor has the same specifications to the winner factor, with the only difference that it is composed by men instead of women, and thus, it looks promising for further consideration. These results are important because they help to identify the most accurate group when forecasting inflation and, thus, help to refine a routine read of the survey with this purpose.

Suggested Citation

  • Carlos Medel, 2021. "Searching for the Best Inflation Forecasters within a Consumer Perceptions Survey: Microdata Evidence from Chile," Working Papers Central Bank of Chile 899, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:899
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_899.pdf
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