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Perceived and Expected Rates of Inflation of US Firms

Author

Listed:
  • Bernardo Candia
  • Michael Weber
  • Yuriy Gorodnichenko
  • Olivier Coibion

Abstract

The seminal work of Jonung (1981) showed that households' perceptions of inflation are the strongest predictor of households' inflation expectations. This fact has been a key ingredient for testing and developing theoretical models of how economic agents form expectations (e.g., the famous Lucas (1972) island model). However, little is known about whether perceptions play a similar role for firms. Using a new survey of American CEOs, we document that inflation perceptions shape the inflation expectations of firms just as Jonung (1981) found for households. These results suggest that information rigidities apply not only for households but also for CEOs.

Suggested Citation

  • Bernardo Candia & Michael Weber & Yuriy Gorodnichenko & Olivier Coibion, 2023. "Perceived and Expected Rates of Inflation of US Firms," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 52-55, May.
    • Handle: RePEc:aea:apandp:v:113:y:2023:p:52-55
    DOI: 10.1257/pandp.20231034
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    Citations

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    Cited by:

    1. Leonardo Ciambezi & Mattia Guerini & Mauro Napoletano & Andrea Roventini, 2023. "Accounting for the Multiple Sources of Inflation: an Agent-Based Model Investigation," GREDEG Working Papers 2023-14, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France, revised Jun 2024.
    2. Manish Jha & Jialin Qian & Michael Weber & Baozhong Yang, 2024. "ChatGPT and Corporate Policies," Papers 2409.17933, arXiv.org, revised Feb 2025.
    3. repec:ecb:ecbdps:202424 is not listed on IDEAS

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • 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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