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Assessing reliability of aggregated inflation views in the European Commission Consumer Survey

Author

Listed:
  • Ewa Stanisławska

    (Narodowy Bank Polski)

  • Maritta Paloviita

    (Bank of Finland)

  • Tomasz Łyziak

    (Narodowy Bank Polski)

Abstract

Using a novel approach based on micro-level survey responses, we assess the reliability of aggregated inflation expectations estimates in the European Commission Consumer Survey. We identify the share of consumers, whose qualitative and quantitative views on expected increase of prices do not match each other. Then we consider the impact of inconsistent survey responses on balance statistics and mean values of quantitative inflation expectations. We also analyze expectations’ formation estimating the sticky-information models. The results, based on Finnish and Polish data, suggest that even if the fraction of inconsistent survey responses is non-negligible, it matters neither for the aggregated figures of inflation views, nor for understanding of the formation of inflation expectations by consumers. We conclude that micro-level inconsistencies do not reduce the reliability of the current EC Consumer Survey dataset. Our results also indicate that inconsistent responses are not important drivers of the inflation overestimation bias displayed in the data.

Suggested Citation

  • Ewa Stanisławska & Maritta Paloviita & Tomasz Łyziak, 2019. "Assessing reliability of aggregated inflation views in the European Commission Consumer Survey," NBP Working Papers 313, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:313
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    Citations

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    Cited by:

    1. Stanisławska, Ewa & Paloviita, Maritta, 2021. "Medium- vs. short-term consumer inflation expectations: Evidence from a new euro area survey," Bank of Finland Research Discussion Papers 10/2021, Bank of Finland.
    2. Baumann, Ursel & Darracq Pariès, Matthieu & Westermann, Thomas & Riggi, Marianna & Bobeica, Elena & Meyler, Aidan & Böninghausen, Benjamin & Fritzer, Friedrich & Trezzi, Riccardo & Jonckheere, Jana & , 2021. "Inflation expectations and their role in Eurosystem forecasting," Occasional Paper Series 264, European Central Bank.
    3. Abildgren, Kim & Kuchler, Andreas, 2021. "Revisiting the inflation perception conundrum," Journal of Macroeconomics, Elsevier, vol. 67(C).

    More about this item

    Keywords

    inflation expectations; European Union; consumer survey.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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