Consumer Attitudes and the Epidemiology of Inflation Expectations

M. Ehrmann, D. Pfajfar, E. Santoro

Research output: Working paperDiscussion paperOther research output

573 Downloads (Pure)

Abstract

This paper studies the formation of consumers’ infl‡ation expectations using
micro-level data from the Michigan Survey. It shows that beyond the well-established socio-economic determinants of infl‡ation expectations like gender, income or education also other characteristics like the household’s fi…nancial situation and its purchasing attitudes matter. Respondents with current or expected …financial difficulties, with pessimistic attitudes about major purchases, or who expect income to go down in the future have considerably higher forecast errors, are further away from professional forecasts and have a stronger updward bias in their expectations than other households. However, their bias shrinks by more than the one of the average household in response to increasing media reporting about in‡flation.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Number of pages36
Volume2014-029
Publication statusPublished - 15 Apr 2014

Publication series

NameCentER Discussion Paper
Volume2014-029

Fingerprint

Inflation expectations
Household
Consumer attitudes
Epidemiology
Income
Socio-economics
OR education
Inflation
Forecast error
Purchasing
Purchase

Keywords

  • Suvey inflation expectations
  • news on inflation
  • Information Stickiness
  • Consumer attitudes

Cite this

Ehrmann, M., Pfajfar, D., & Santoro, E. (2014). Consumer Attitudes and the Epidemiology of Inflation Expectations. (CentER Discussion Paper; Vol. 2014-029). Tilburg: Economics.
Ehrmann, M. ; Pfajfar, D. ; Santoro, E. / Consumer Attitudes and the Epidemiology of Inflation Expectations. Tilburg : Economics, 2014. (CentER Discussion Paper).
@techreport{6078d0e307af48a59e8b6ffc387c1787,
title = "Consumer Attitudes and the Epidemiology of Inflation Expectations",
abstract = "This paper studies the formation of consumers’ infl‡ation expectations usingmicro-level data from the Michigan Survey. It shows that beyond the well-established socio-economic determinants of infl‡ation expectations like gender, income or education also other characteristics like the household’s fi…nancial situation and its purchasing attitudes matter. Respondents with current or expected …financial difficulties, with pessimistic attitudes about major purchases, or who expect income to go down in the future have considerably higher forecast errors, are further away from professional forecasts and have a stronger updward bias in their expectations than other households. However, their bias shrinks by more than the one of the average household in response to increasing media reporting about in‡flation.",
keywords = "Suvey inflation expectations, news on inflation, Information Stickiness, Consumer attitudes",
author = "M. Ehrmann and D. Pfajfar and E. Santoro",
year = "2014",
month = "4",
day = "15",
language = "English",
volume = "2014-029",
series = "CentER Discussion Paper",
publisher = "Economics",
type = "WorkingPaper",
institution = "Economics",

}

Ehrmann, M, Pfajfar, D & Santoro, E 2014 'Consumer Attitudes and the Epidemiology of Inflation Expectations' CentER Discussion Paper, vol. 2014-029, Economics, Tilburg.

Consumer Attitudes and the Epidemiology of Inflation Expectations. / Ehrmann, M.; Pfajfar, D.; Santoro, E.

Tilburg : Economics, 2014. (CentER Discussion Paper; Vol. 2014-029).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Consumer Attitudes and the Epidemiology of Inflation Expectations

AU - Ehrmann, M.

AU - Pfajfar, D.

AU - Santoro, E.

PY - 2014/4/15

Y1 - 2014/4/15

N2 - This paper studies the formation of consumers’ infl‡ation expectations usingmicro-level data from the Michigan Survey. It shows that beyond the well-established socio-economic determinants of infl‡ation expectations like gender, income or education also other characteristics like the household’s fi…nancial situation and its purchasing attitudes matter. Respondents with current or expected …financial difficulties, with pessimistic attitudes about major purchases, or who expect income to go down in the future have considerably higher forecast errors, are further away from professional forecasts and have a stronger updward bias in their expectations than other households. However, their bias shrinks by more than the one of the average household in response to increasing media reporting about in‡flation.

AB - This paper studies the formation of consumers’ infl‡ation expectations usingmicro-level data from the Michigan Survey. It shows that beyond the well-established socio-economic determinants of infl‡ation expectations like gender, income or education also other characteristics like the household’s fi…nancial situation and its purchasing attitudes matter. Respondents with current or expected …financial difficulties, with pessimistic attitudes about major purchases, or who expect income to go down in the future have considerably higher forecast errors, are further away from professional forecasts and have a stronger updward bias in their expectations than other households. However, their bias shrinks by more than the one of the average household in response to increasing media reporting about in‡flation.

KW - Suvey inflation expectations

KW - news on inflation

KW - Information Stickiness

KW - Consumer attitudes

M3 - Discussion paper

VL - 2014-029

T3 - CentER Discussion Paper

BT - Consumer Attitudes and the Epidemiology of Inflation Expectations

PB - Economics

CY - Tilburg

ER -

Ehrmann M, Pfajfar D, Santoro E. Consumer Attitudes and the Epidemiology of Inflation Expectations. Tilburg: Economics. 2014 Apr 15. (CentER Discussion Paper).