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Inflation Expectations Of Japanese Households: Micro Evidence From A Consumer Confidence Survey




Economists agree that economic agents' expectations are crucially important in determining macroeconomic outcomes. However, mainstream macroeconomists usually simply assume that expectations are rational. 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, 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.

Suggested Citation

  • Hori, Masahiro & Kawagoe, Masaaki, 2013. "Inflation Expectations Of Japanese Households: Micro Evidence From A Consumer Confidence Survey," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 54(1), pages 17-38, June.
  • Handle: RePEc:hit:hitjec:v:54:y:2013:i:1:p:17-38

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    References listed on IDEAS

    1. 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.
    2. Batchelor, Roy & Dua, Pami, 1991. "Blue Chip Rationality Tests," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(4), pages 692-705, November.
    3. Masahiro Hori & Satoshi Shimizutani, 2005. "Price expectations and consumption under deflation: evidence from Japanese household survey data," International Economics and Economic Policy, Springer, vol. 2(2), pages 127-151, November.
    4. 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.
    5. Lloyd B. Thomas, 1999. "Survey Measures of Expected U.S. Inflation," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 125-144, Fall.
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    Cited by:

    1. repec:eee:jjieco:v:46:y:2017:i:c:p:53-68 is not listed on IDEAS
    2. Yoshiyuki Nakazono, 2016. "Inflation expectations and monetary policy under disagreements," Bank of Japan Working Paper Series 16-E-1, Bank of Japan.
    3. Ueno, Yuko, 2014. "Updating Behavior of Inflation Expectations: Evidence from Japanese Household Panel Data," CIS Discussion paper series 617, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    4. Hattori, Masazumi & Yetman, James, 2017. "The evolution of inflation expectations in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 46(C), pages 53-68.
    5. Shioji, Etsuro, 2015. "Time varying pass-through: Will the yen depreciation help Japan hit the inflation target?," Journal of the Japanese and International Economies, Elsevier, vol. 37(C), pages 43-58.

    More about this item


    inflation expectations; consumer survey;

    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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