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Public Information and Household Expectations in Developing Countries: Evidence From a Natural Experiment

Author

Listed:
  • Paul Carrillo
  • M. Shahe Emran

    (Department of Economics/Institute for International Economic Policy, George Washington University)

Abstract

Governments provide public information about economic conditions to reduce information imperfections and facilitate efficient allocation of resources. Do households in developing countries rely on public signals to inform themselves about market conditions? To identify the importance of public information in households price expectations, we take advantage of a unique natural experiment in Ecuador where the published inflation rate had been different from the true rate over a period of 14 months due to a software error. We find that the public signal about prices plays an important role in households price expectations; the effect is stronger for better educated families, older people and men.

Suggested Citation

  • Paul Carrillo & M. Shahe Emran, 2009. "Public Information and Household Expectations in Developing Countries: Evidence From a Natural Experiment," Working Papers 2009-08, The George Washington University, Institute for International Economic Policy.
    • Handle: RePEc:gwi:wpaper:2009-08
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Public Information; Price Expectations; Developing Countries; Natural Experiment; Heterogeneity;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D10 - Microeconomics - - Household Behavior - - - General
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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