Consumer attitudes and the epidemiology of inflation expectations

Arbeitspapier

This paper studies the formation of consumers' inflation expectations using micro-level data from the Michigan Survey. It shows that beyond the well-established socioeconomic determinants of inflation expectations such as gender, income or education, other characteristics such as the households' financial situation and their purchasing attitudes also matter. Respondents with current or expected financial difficulties, pessimistic attitudes about major purchases, or expectations that income will go down in the future have considerably higher forecast errors, are further away from professional forecasts, and have a stronger upward bias in their expectations than other households. However, their bias shrinks by more than that of the average household in response to increasing media reporting about inflation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bank of Canada Working Paper ; No. 2014-28

Classification and Topics

• Classification: Wirtschaft ; Forecasting Models; Simulation Methods ; Expectations; Speculations ; Price Level; Inflation; Deflation
• Subject: Inflation and prices

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ehrmann, Michael ; Pfajfar, Damjan ; Santoro, Emiliano
• Event: Veröffentlichung
• (who): Bank of Canada
• (where): Ottawa
• (when): 2014

Further information

• DOI: doi:10.34989/swp-2014-28
• Handle: http://hdl.handle.net/10419/103032
• Last update: 10.03.2025, 11:44 AM CET