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Measurement of perceived and expected inflation on the basis of consumer survey data

Author

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  • Tomasz Lyziak

Abstract

This paper discusses measurement techniques used in the literature to quantify inflation perception and expectations on the basis of qualitative survey data. Description of quantification methods and assessment of their strengths and weaknesses is supplemented with an overview of direct measures of consumer inflation expectations in the European Union quantified with a number of techniques. Except presenting quantification methods, constraints in their interpretation and their results, the paper describes how direct measures of inflation expectations are used in central banks nowadays.

Suggested Citation

  • Tomasz Lyziak, 2010. "Measurement of perceived and expected inflation on the basis of consumer survey data," IFC Working Papers 5, Bank for International Settlements.
  • Handle: RePEc:bis:bisiwp:5
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    References listed on IDEAS

    as
    1. Jeff Fuhrer & George Moore, 1995. "Inflation Persistence," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 127-159.
    2. Gali, Jordi & Gertler, Mark, 1999. "Inflation dynamics: A structural econometric analysis," Journal of Monetary Economics, Elsevier, vol. 44(2), pages 195-222, October.
    3. Michela Nardo, 2003. "The Quantification of Qualitative Survey Data : A Critical Assessment," Journal of Economic Surveys, Wiley Blackwell, vol. 17(5), pages 645-668, December.
    4. Simmons, Peter & Weiserbs, Daniel, 1992. "Consumer Price Perceptions and Expectations," Oxford Economic Papers, Oxford University Press, vol. 44(1), pages 35-50, January.
    5. Magnus Forsells & Geoff Kenny, 2004. "Survey Expectations, Rationality and the Dynamics of Euro Area Inflation," Journal of Business Cycle Measurement and Analysis, OECD Publishing, Centre for International Research on Economic Tendency Surveys, vol. 2004(1), pages 13-41.
    6. Smith, Jeremy & McAleer, Michael, 1995. "Alternative Procedures for Converting Qualitative Response Data to Quantitative Expectations: An Application to Australian Manufacturing," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 165-185, April-Jun.
    7. Batchelor, Roy A & Orr, Adrian B, 1988. "Inflation Expectations Revisited," Economica, London School of Economics and Political Science, vol. 55(219), pages 317-331, August.
    8. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
    9. Marvin Goodfriend & Robert King, 1997. "The New Neoclassical Synthesis and the Role of Monetary Policy," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 231-296, National Bureau of Economic Research, Inc.
    10. Jan Marc Berk, 1999. "Measuring inflation expectations: a survey data approach," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1467-1480.
    11. Baker, Michael, 1992. "Digit preference in CPS unemployment data," Economics Letters, Elsevier, vol. 39(1), pages 117-121, May.
    12. Fuhrer, Jeffrey C., 2010. "Inflation Persistence," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.),Handbook of Monetary Economics, edition 1, volume 3, chapter 9, pages 423-486, Elsevier.
    13. Jonung, Lars, 1986. "Uncertainty about inflationary perceptions and expectations," Journal of Economic Psychology, Elsevier, vol. 7(3), pages 315-325, September.
    14. Galí, Jordi & Gertler, Mark, 1999. "Inflation Dynamics: A Structural Economic Analysis," CEPR Discussion Papers 2246, C.E.P.R. Discussion Papers.
    15. Łyziak, Tomasz, 2003. "Consumer inflation expectations in Poland," Working Paper Series 287, European Central Bank.
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    More about this item

    Keywords

    Inflation Expectations; Consumers; Survey; EU;

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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