Economic literacy and inflation expectations: evidence from a laboratory experiment
We present new experimental evidence on heterogeneity in the formation of inflation expectations and relate the variation to economic literacy and demographics. The experimental design allows us to investigate two channels through which expectations-formation may vary across individuals: (1) the choice of information and (2) the use of given information. Subjects who are more economically literate perform better along both dimensions—they choose more-relevant information and make better use of given information. Compared with survey data on inflation expectations, fewer demographic factors are associated with variation in inflation expectations, and economic literacy in most cases accounts for demographic variation in expectations.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.bos.frb.org/
More information through EDIRC
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marimon, R. & Sunder, S., 1995.
"Does a Constant Money Growth Rule Help Stabilize Inflation?: Experimental Evidence,"
GSIA Working Papers
1995-04, Carnegie Mellon University, Tepper School of Business.
- Marimon, Ramon & Sunder, Shyam, 1995. "Does a constant money growth rule help stabilize inflation?: experimental evidence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 43(1), pages 111-156, December.
- M.C.J. van Rooij & A. Lusardi & R. Alessie, 2007.
"Financial Literacy and Stock Market Participation,"
07-23, Utrecht School of Economics.
- Maarten van Rooij & Annamaria Lusardi & Rob Alessi, 2007. "Financial literacy and stock market participation," DNB Working Papers 146, Netherlands Central Bank, Research Department.
- Maarten van Rooij & Annamaria Lusardi & Rob Alessie, 2007. "Financial Literacy and Stock Market Participation," CeRP Working Papers 66, Center for Research on Pensions and Welfare Policies, Turin (Italy).
- van Rooij, Maarten & Lusardi, Annamaria & Alessie, Rob J. M., 2007. "Financial literacy and stock market participation," CFS Working Paper Series 2007/27, Center for Financial Studies (CFS).
- Maarten vanRooij & Annamaria Lusardi & Rob Alessie, 2007. "Financial Literacy and Stock Market Participation," Working Papers wp162, University of Michigan, Michigan Retirement Research Center.
- Maarten van Rooij & Annamaria Lusardi & Rob Alessie, 2007. "Financial Literacy and Stock Market Participation," NBER Working Papers 13565, National Bureau of Economic Research, Inc.
- Wilbert van der Klaauw & Wandi Bruine de Bruin & Giorgio Topa & Basit Zafar & Olivier Armantier, 2012.
"Inflation Expectations and Behavior: Do Survey Respondents Act on their Beliefs?,"
2012 Meeting Papers
121, Society for Economic Dynamics.
- Olivier Armantier & Wändi Bruine de Bruin & Giorgio Topa & Wilbert van der Klaauw & Basit Zafar, 2011. "Inflation expectations and behavior: Do survey respondents act on their beliefs?," Staff Reports 509, Federal Reserve Bank of New York.
- Pfajfar, Damjan & Žakelj, Blaž, 2014.
"Experimental evidence on inflation expectation formation,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 44(C), pages 147-168.
- Pfajfar, D. & Zakelj, B., 2014. "Experimental evidence on inflation expectation formation," Other publications TiSEM f337739d-e15a-4461-a461-8, Tilburg University, School of Economics and Management.
- Gerald P. Dwyer, Jr. & Arlington W. Williams & Raymond Battalio & Timothy Mason, 1989.
"Tests of rational expectations in a stark setting,"
1989-001, Federal Reserve Bank of St. Louis.
- Adam, Klaus, 2005.
"Experimental evidence on the persistence of output and inflation,"
Working Paper Series
0492, European Central Bank.
- Klaus Adam, 2007. "Experimental Evidence on the Persistence of Output and Inflation," Economic Journal, Royal Economic Society, vol. 117(520), pages 603-636, 04.
- Adam, Klaus, 2005. "Experimental Evidence on the Persistence of Output and Inflation," CEPR Discussion Papers 4885, C.E.P.R. Discussion Papers.
- Christopher D Carroll, 2002.
"Macroeconomic Expectations of Households and Professional Forecasters,"
Economics Working Paper Archive
477, The Johns Hopkins University,Department of Economics.
- Christopher D. Carroll, 2003. "Macroeconomic Expectations Of Households And Professional Forecasters," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 269-298, February.
- Otwin Becker & Johannes Leitner & Ulrike Leopold-Wildburger, 2009. "Expectation formation and regime switches," Experimental Economics, Springer, vol. 12(3), pages 350-364, September.
- Pfajfar, D. & Santoro, E., 2008. "Asymmetries in Inflation Expectation Formation Across Demographic Groups," Cambridge Working Papers in Economics 0824, Faculty of Economics, University of Cambridge.
- Jonung, Lars, 1981. "Perceived and Expected Rates of Inflation in Sweden," American Economic Review, American Economic Association, vol. 71(5), pages 961-68, December.
- Hey, John D., 1994. "Expectations formation: Rational or adaptive or ...?," Journal of Economic Behavior & Organization, Elsevier, vol. 25(3), pages 329-349, December.
- Bergmann, Barbara R., 1988. "An experiment on the formation of expectations," Journal of Economic Behavior & Organization, Elsevier, vol. 9(2), pages 137-151, March.
When requesting a correction, please mention this item's handle: RePEc:fip:fedbpp:11-8. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio)
If references are entirely missing, you can add them using this form.