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Non-Positive Scaling Factor in Probability Quantification Methods: Deriving Consumer Inflation Perceptions and Expectations in the Whole Euro Area and Ireland

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  • Tomasz Łyziak

    (National Bank of Poland, Ul. Swietokrzyska 11/21, Warsaw 00-919, Poland.)

Abstract

There are problems with using probability quantification methods designed for polychotomous survey questions when the scaling factor applied in those methods becomes non-positive. The way of adjusting probability methods proposed in this article and verified empirically allows using them in such circumstances. The results for the euro area and Ireland suggest that the recent financial crisis made consumer inflation perception and expectations go down; however, it did not create deflationary expectations in this group of economic agents.

Suggested Citation

  • Tomasz Łyziak, 2013. "Non-Positive Scaling Factor in Probability Quantification Methods: Deriving Consumer Inflation Perceptions and Expectations in the Whole Euro Area and Ireland," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 55(1), pages 77-98, March.
    • Handle: RePEc:pal:compes:v:55:y:2013:i:1:p:77-98
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    References listed on IDEAS

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    1. Jan Marc Berk, 1999. "Measuring inflation expectations: a survey data approach," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1467-1480.
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    More about this item

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions

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