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Inflation Expectations Of Japanese Households: Micro Evidence From A Consumer Confidence Survey

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  • HORI, MASAHIRO
  • 堀, 雅博
  • KAWAGOE, MASAAKI

Abstract

Economists agree that economic agents' expectations are crucially important in determining macroeconomic outcomes. However, mainstream macroeconomists usually simply assume that expectations are rational. Against this background, this study examines the properties of Japanese households' inflation expectations using micro-based inflation expectations data from the Monthly Consumer Confidence Survey Covering All of Japan. Our analyses show that actual inflation expectations by Japanese households are not rational in the sense that they are upward biased, and individual households appear not to instantaneously incorporate into their expectations information that is freely available from news reports on the views of professional forecasters.

Suggested Citation

  • Hori, Masahiro & 堀, 雅博 & Kawagoe, Masaaki, 2013. "Inflation Expectations Of Japanese Households: Micro Evidence From A Consumer Confidence Survey," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 54(1), pages 17-38, June.
    • Handle: RePEc:hit:hitjec:v:54:y:2013:i:1:p:17-38
    DOI: 10.15057/25776
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    Cited by:

    1. Hattori, Masazumi & Yetman, James, 2017. "The evolution of inflation expectations in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 46(C), pages 53-68.
    2. Chee-Hong Law & Kim Huat Goh, 2024. "A systematic literature review of the implications of media on inflation expectations," International Economics and Economic Policy, Springer, vol. 21(2), pages 311-340, May.
    3. Yoshiyuki Nakazono, 2016. "Inflation expectations and monetary policy under disagreements," Bank of Japan Working Paper Series 16-E-1, Bank of Japan.
    4. Reid, Monique & Siklos, Pierre & Plessis, Stan Du, 2021. "What drives household inflation expectations in South Africa? Demographics and anchoring under inflation targeting," Economic Systems, Elsevier, vol. 45(3).
    5. Junichi Kikuchi & Yoshiyuki Nakazono, 2023. "The Formation of Inflation Expectations: Microdata Evidence from Japan," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(6), pages 1609-1632, September.
    6. Ueno, Yuko, 2014. "Updating Behavior of Inflation Expectations: Evidence from Japanese Household Panel Data," CIS Discussion paper series 617, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    7. Shioji, Etsuro, 2015. "Time varying pass-through: Will the yen depreciation help Japan hit the inflation target?," Journal of the Japanese and International Economies, Elsevier, vol. 37(C), pages 43-58.
    8. NAKAJIMA, Jouchi, 2023. "Estimation of firms' inflation expectations using the survey DI," Discussion Paper Series 749, Institute of Economic Research, Hitotsubashi University.
    9. Yosuke Uno & Saori Naganuma & Naoko Hara, 2018. "New Facts about Firms' Inflation Expectations: Simple Tests for a Sticky Information Model," Bank of Japan Working Paper Series 18-E-14, Bank of Japan.
    10. Etsuro Shioji, 2015. "Time varying pass-through: Will the yen depreciation help Japan hit the inflation," Working Papers e092, Tokyo Center for Economic Research.
    11. Young Bin Ahn & Yoichi Tsuchiya, 2022. "Consumer’s perceived and expected inflation in Japan—irrationality or asymmetric loss?," Empirical Economics, Springer, vol. 63(3), pages 1247-1292, September.

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    More about this item

    Keywords

    inflation expectations; consumer survey;

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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