News on Inflation and the Epidemiology of Inflation Expectations

D. Pfajfar, E. Santoro

Research output: Working paperDiscussion paperOther research output

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Abstract

Abstract: This paper examines the nexus between news coverage on inflation and households' inflation expectations. In doing so, we test the epidemiological foundations of the sticky information model (Carroll, 2003, 2006). We use both aggregate and household-level data from the Survey Research Center at the University of Michigan. We highlight a fundamental disconnection between news on inflation, consumers' frequency of expectation updating and the accuracy of their expectations. Our evidence provides at best weak support to the epidemiological framework, as most of the consumers who update their expectations do not revise them towards professional forecasters' mean forecast.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Number of pages47
Volume2012-012
Publication statusPublished - 2012

Publication series

NameEBC Discussion Paper
Volume2012-012

Keywords

  • Inflation
  • Survey Expectations
  • News
  • Information Stickiness

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