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Individual inflation expectations in a declining-inflation environment: Evidence from survey data

Author

Listed:
  • Malka de Castro Campos
  • Federica Teppa

Abstract

The paper analyses individual inflation expectations in the Netherlands over the period 2008-2014. The empirical evidence is based on the DNB Household Survey, a longitudinal online panel survey representative of Dutch-speaking population. The focus is on inflation measures based on information about the general price level, the aggregate real estate price and the price of the own house. Both individual background microeconomic characteristics and macroeconomic variables are taken into account in our empirical models devoted to explain the main determinants of inflation expectations. We find that inflation expectations decrease over the years, suggesting that individuals can pick up the direction of the price change, but respondents do not report high risk of deflation. The target inflation of 2 percent seems to be well anchored in individual expectations.

Suggested Citation

  • Malka de Castro Campos & Federica Teppa, 2016. "Individual inflation expectations in a declining-inflation environment: Evidence from survey data," DNB Working Papers 508, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:508
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    File URL: https://www.dnb.nl/binaries/Working%20paper%20508_tcm46-339558.pdf
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    References listed on IDEAS

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    6. Niu, Geng & van Soest, Arthur, 2014. "House Price Expectations," IZA Discussion Papers 8536, Institute of Labor Economics (IZA).
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    Cited by:

    1. Ashima Goyal & Prashant Parab, 2019. "Modeling heterogeneity and rationality of inflation expectations across Indian households," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2019-02, Indira Gandhi Institute of Development Research, Mumbai, India.

    More about this item

    Keywords

    Inflation Risk; Survey Data; Subjective expectations;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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