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Updating inflation expectations: Evidence from micro-data

Author

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  • Dräger, Lena
  • Lamla, Michael J.

Abstract

Utilizing the Michigan Household Consumer survey’s rotating panel microstructure we can identify if individuals have adjusted their expectations towards inflation. This allows us to directly capture the updating behavior of individual consumers regarding their short- and long-run inflation expectations.

Suggested Citation

  • Dräger, Lena & Lamla, Michael J., 2012. "Updating inflation expectations: Evidence from micro-data," Economics Letters, Elsevier, vol. 117(3), pages 807-810.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:807-810
    DOI: 10.1016/j.econlet.2012.08.033
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    References listed on IDEAS

    as
    1. Andrade, Philippe & Le Bihan, Hervé, 2013. "Inattentive professional forecasters," Journal of Monetary Economics, Elsevier, vol. 60(8), pages 967-982.
    2. N. Gregory Mankiw & Ricardo Reis, 2002. "Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1295-1328.
    3. Michael J. Lamla & Samad Sarferaz, 2012. "Updating inflation expectations," KOF Working papers 12-301, KOF Swiss Economic Institute, ETH Zurich.
    4. Olivier Coibion & Yuriy Gorodnichenko, 2015. "Information Rigidity and the Expectations Formation Process: A Simple Framework and New Facts," American Economic Review, American Economic Association, vol. 105(8), pages 2644-2678, August.
    5. Doepke Joerg & Dovern Jonas & Fritsche Ulrich & Slacalek Jiri, 2008. "The Dynamics of European Inflation Expectations," The B.E. Journal of Macroeconomics, De Gruyter, vol. 8(1), pages 1-23, March.
    6. Christopher D. Carroll, 2003. "Macroeconomic Expectations of Households and Professional Forecasters," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 269-298.
    7. Souleles, Nicholas S, 2004. "Expectations, Heterogeneous Forecast Errors, and Consumption: Micro Evidence from the Michigan Consumer Sentiment Surveys," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(1), pages 39-72, February.
    8. Mojon, Benoît & Altissimo, Filippo & Zaffaroni, Paolo, 2007. "Fast micro and slow macro: can aggregation explain the persistence of inflation?," Working Paper Series 729, European Central Bank.
    9. Lena Draeger, 2011. "Endogenous persistence with recursive inattentiveness," KOF Working papers 11-285, KOF Swiss Economic Institute, ETH Zurich.
    10. Sims, Christopher A., 2003. "Implications of rational inattention," Journal of Monetary Economics, Elsevier, vol. 50(3), pages 665-690, April.
    11. Damjan Pfajfar & Emiliano Santoro, 2013. "News on Inflation and the Epidemiology of Inflation Expectations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(6), pages 1045-1067, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Consumer Forecast Revisions: Is Information Really so Sticky?
      by noreply@blogger.com (Carola) in Quantitative Ease on 2017-09-14 21:21:00

    Citations

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    Cited by:

    1. Lena Draeger & Michael J. Lamla, 2015. "Disagreement à la Taylor: Evidence from Survey Microdata," KOF Working papers 15-380, KOF Swiss Economic Institute, ETH Zurich.
    2. repec:eee:ecolet:v:161:y:2017:i:c:p:112-115 is not listed on IDEAS
    3. Pfajfar, Damjan & Žakelj, Blaž, 2014. "Experimental evidence on inflation expectation formation," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 147-168.
    4. Xu, Kun & Cheng, Jian-hua & Xu, Wenli, 2016. "通胀及通胀预期冲击的动态特征分析
      [Study on Dynamics of Inflation and Inflation Expectation Shocks in China]      ," MPRA Paper 71977, University Library of Munich, Germany.
    5. repec:bla:obuest:v:79:y:2017:i:6:p:933-968 is not listed on IDEAS
    6. repec:spr:portec:v:16:y:2017:i:3:d:10.1007_s10258-017-0129-x is not listed on IDEAS

    More about this item

    Keywords

    Updating Inflation expectations; Micro-data; Time-varying degree of inattention;

    JEL classification:

    • 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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