IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v55y1979i2p136-148.html
   My bibliography  Save this article

The Formation of Consumer Inflationary Expectations in Australia

Author

Listed:
  • L. V. DEFRIS
  • R. A. WILLIAMS

Abstract

This paper analyzes the quantitative price expectations of consumers as obtained from consumer surveys. Price expectations are considered as functions of (i) past rates of inflation (ii) other economic variables, and (iii) consumer sentiment variables. The dominant influence on expectations is the most recent change in the consumer price index. Wage‐indexation decisions and changes in the money supply also exert a significant influence on mean expectations. The variability of price expectations across consumers is proportional to the mean level of expectations.

Suggested Citation

  • L. V. Defris & R. A. Williams, 1979. "The Formation of Consumer Inflationary Expectations in Australia," The Economic Record, The Economic Society of Australia, vol. 55(2), pages 136-148, June.
    • Handle: RePEc:bla:ecorec:v:55:y:1979:i:2:p:136-148
    DOI: 10.1111/j.1475-4932.1979.tb02213.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1475-4932.1979.tb02213.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1475-4932.1979.tb02213.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Breusch, T S, 1978. "Testing for Autocorrelation in Dynamic Linear Models," Australian Economic Papers, Wiley Blackwell, vol. 17(31), pages 334-355, December.
    2. repec:bla:ecorec:v:53:y:1977:i:142&143:p:390-404 is not listed on IDEAS
    3. Parkin, Michael & Sumner, Michael & Ward, Robert, 1976. "The effects of excess demand, generalized expectations and wage-price controls on wage inflation in the UK: 1956-1971," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 2(1), pages 193-221, January.
    4. T. J. Valentine, 1977. "Price Expectations in Australia: An Alternative Analysis," The Economic Record, The Economic Society of Australia, vol. 53(3), pages 390-404, September.
    5. Nelson, Charles R, 1975. "Rational Expectations and the Predictive Efficiency of Economic Models," The Journal of Business, University of Chicago Press, vol. 48(3), pages 331-343, July.
    6. Laidler, David, 1978. "Money and money income: An essay on the `transmission mechanism'," Journal of Monetary Economics, Elsevier, vol. 4(2), pages 151-191, April.
    7. F. Thomas Juster & Paul Wachtel, 1972. "Inflation and the Consumer," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 3(1), pages 71-122.
    8. Pagan, Adrian, 1974. "A Generalised Approach to the Treatment of Autocorrelation," Australian Economic Papers, Wiley Blackwell, vol. 13(23), pages 267-280, December.
    9. Holden, K & Peel, D A, 1977. "An Empirical Investigation of Inflationary Expectations," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 39(4), pages 291-299, November.
    10. Mordecai Ezekiel, 1938. "The Cobweb Theorem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 52(2), pages 255-280.
    11. repec:bla:econom:v:39:y:1972:i:153:p:60-69 is not listed on IDEAS
    12. Danes, Michael, 1975. "The Measurement and Explanation of Inflationary Expectations in Australia," Australian Economic Papers, Wiley Blackwell, vol. 14(24), pages 75-87, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yuxiang, Karl & Chen, Zhongchang, 2010. "Monetary policy credibility and inflationary expectation," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 487-497, August.
    2. Jocelyn Horne, 1981. "Rational Expectations and the Defris‐Williams Inflationary Expectations Series," The Economic Record, The Economic Society of Australia, vol. 57(3), pages 261-268, September.
    3. Ranyard, Rob & Missier, Fabio Del & Bonini, Nicolao & Duxbury, Darren & Summers, Barbara, 2008. "Perceptions and expectations of price changes and inflation: A review and conceptual framework," Journal of Economic Psychology, Elsevier, vol. 29(4), pages 378-400, August.
    4. Chris M. Alaouze, 2003. "A modified logit model for time series with an application to the pricing behaviour of manufacturing firms in Australia," Empirical Economics, Springer, vol. 28(3), pages 599-613, July.
    5. Sam Ouliaris, 1981. "Household Saving and The Rate of Interest," The Economic Record, The Economic Society of Australia, vol. 57(3), pages 205-214, September.
    6. Peter Saunders, 1981. "The Formation of Producers' Price Expectations in Australia," The Economic Record, The Economic Society of Australia, vol. 57(4), pages 368-378, December.
    7. Gärling, Tommy & Gamble, Amelie & Christandl, Fabian, 2013. "Income increases do not compensate for perceived inflation—A price-consumption anomaly," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 47(C), pages 11-15.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jocelyn Horne, 1981. "Rational Expectations and the Defris‐Williams Inflationary Expectations Series," The Economic Record, The Economic Society of Australia, vol. 57(3), pages 261-268, September.
    2. Skold, Karl Durwood, 1989. "The integration of alternative information systems: an application to the Hogs and Pigs report," ISU General Staff Papers 1989010108000010239, Iowa State University, Department of Economics.
    3. V. B. Hall, 1980. "Excess Demand and ExDectations Influences on Price Changes in Australian Manufacturing Industry," The Economic Record, The Economic Society of Australia, vol. 56(152), pages 69-81, March.
    4. Shonkwiler, J. Scott & Spreen, Thomas H., 1980. "The Rational Expectations Hypothesis: An Empirical Application To The Florida Escarole Market," 1980 Annual Meeting, July 27-30, Urbana-Champaign, Illinois 278478, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Tsai, Grace Yueh-Hsiang, 1989. "A dynamic model of the U.S. cotton market with rational expectations," ISU General Staff Papers 1989010108000012168, Iowa State University, Department of Economics.
    6. Silva Lopes, Artur, 1994. "A "hipótese das expectativas racionais": teoria e realidade (uma visita guiada à literatura até 1992) [The "rational expectations hypothesis": theory and reality (a guided tour ," MPRA Paper 9699, University Library of Munich, Germany, revised 23 Jul 2008.
    7. Michael G. Kirby, 1981. "An Investigation of the Specification and Stability of the Australian Aggregate Wage Equation," The Economic Record, The Economic Society of Australia, vol. 57(1), pages 35-46, March.
    8. McNulty, Mark S., 1985. "Information usage in the formation of price expectations: theory and econometric tests," ISU General Staff Papers 1985010108000013085, Iowa State University, Department of Economics.
    9. Tegene, Abebayehu, 1983. "A rational expectations approach to the modelling of agricultural supply: a case study of Iowa," ISU General Staff Papers 198301010800009963, Iowa State University, Department of Economics.
    10. Sam Ouliaris, 1981. "Household Saving and The Rate of Interest," The Economic Record, The Economic Society of Australia, vol. 57(3), pages 205-214, September.
    11. James Chan-Lee, 1980. "A review of recent work in the area of inflationary expectations," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(1), pages 45-86, March.
    12. Backhouse, Roger E. & Forder, James & Laskaridis, Christina, 2023. "The natural rate of unemployment and the NAIRU," European Economic Review, Elsevier, vol. 159(C).
    13. T. J. Valentine, 1977. "Price Expectations in Australia: An Alternative Analysis," The Economic Record, The Economic Society of Australia, vol. 53(3), pages 390-404, September.
    14. Peter Saunders, 1981. "The Formation of Producers' Price Expectations in Australia," The Economic Record, The Economic Society of Australia, vol. 57(4), pages 368-378, December.
    15. John Mcdonald, 1977. "The Relationship Between Wage Inflation and Excess Demand — New Estimates Using Optimal Extrapolative Wage Expectations," The Economic Record, The Economic Society of Australia, vol. 53(4), pages 490-507, December.
    16. Zia-Ur- Rahman, 2019. "Influence of Excessive Expenditure of the Government in Perspective of Interest Rate and Money Circulation Which in Turn Affects the Growing Process in Pakistan," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 6(2), pages 120-129.
    17. Fausto, Cavalli, 2016. "A cobweb model with alternating demand and supply functions," Working Papers 325, University of Milano-Bicocca, Department of Economics, revised 07 Feb 2016.
    18. Rodrigo Hakim das Neves, 2020. "Bitcoin pricing: impact of attractiveness variables," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-18, December.
    19. Bel, K. & Paap, R., 2013. "Modeling the impact of forecast-based regime switches on macroeconomic time series," Econometric Institute Research Papers EI 2013-25, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    20. repec:wyi:journl:002087 is not listed on IDEAS
    21. Sollis, Robert, 2011. "Spurious regression: A higher-order problem," Economics Letters, Elsevier, vol. 111(2), pages 141-143, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecorec:v:55:y:1979:i:2:p:136-148. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.