Inflation Expectations of Japanese Households: Micro Evidence from a Consumer Confidence Survey
AbstractEconomists unanimously agree that economic agents’ expectations are crucially important in determining macroeconomic outcomes. However, mainstream macroeconomists usually simply assume that expectations are rational, leaving unexamined the fundamental question whether individual agents’ actual expectations are rational or not. Against this background, this study examines the properties of Japanese households’ inflation expectations using micro-based inflation expectations data from the Monthly Consumer Confidence Survey Covering All of Japan. Our analyses show that actual inflation expectations by Japanese households are not rational in the sense that they are upward biased, at least ex post, and individual households appear not to instantaneously incorporate into their expectations information that is freely available from news reports on the views of professional forecasters. Our findings, moreover, suggest that while the sticky information model appears to better explain inflation expectations dynamics (than rational expectations models), we encounter a handful of facts that look inconsistent with the simple model.
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Bibliographic InfoPaper provided by Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University in its series CIS Discussion paper series with number 530.
Length: 38 p.
Date of creation: Nov 2011
Date of revision:
Note: This is a revised version of a paper originally presented at the ESRI International Conference 2009 in Tokyo on June 29, 2009.
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inflation expectations; consumer survey;
Other versions of this item:
- Hori, Masahiro & Kawagoe, Masaaki, 2013. "Inflation Expectations Of Japanese Households: Micro Evidence From A Consumer Confidence Survey," Hitotsubashi Journal of Economics, Hitotsubashi University, Hitotsubashi University, vol. 54(1), pages 17-38, June.
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
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