IDEAS home Printed from https://ideas.repec.org/p/man/cgbcrp/99.html
   My bibliography  Save this paper

US Consumer Inflation Expectations: Evidence Regarding Learning, Accuracy and Demographics

Author

Listed:
  • Robert D. J. Anderson

Abstract

Central banks have become increasingly aware of the importance of consumer inflation expectations in meeting monetary policy objectives. US consumer year-ahead inflation expectations data is available as measured by the Michigan 'Survey of Consumer Attitudes and Behavior'. Using the detailed demographic information recorded as part of the interview process to accommodate forecast heterogeneity, results suggest the accuracy of forecasts is linked to the demographic characteristics of the respondent. This survey also contains a short-rotating panel dimension, with most respondents being reinterviewed six months after the initial interview. Uniquely, this paper uses these matched interviews to examine whether consumers learn about inflation, improving the accuracy of their forecast from initial to reinterview. Results suggest, having corrected for attrition bias, that being reinterviewed stimulates agents to learn and improve forecast accuracy, the level of improvement being dependent on the demographic characteristic of the interviewee.

Suggested Citation

  • Robert D. J. Anderson, 2008. "US Consumer Inflation Expectations: Evidence Regarding Learning, Accuracy and Demographics," Centre for Growth and Business Cycle Research Discussion Paper Series 99, Economics, The University of Manchester.
    • Handle: RePEc:man:cgbcrp:99
    as

    Download full text from publisher

    File URL: https://hummedia.manchester.ac.uk/schools/soss/cgbcr/discussionpapers/dpcgbcr99.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. James R. Carpenter & Michael G. Kenward & Stijn Vansteelandt, 2006. "A comparison of multiple imputation and doubly robust estimation for analyses with missing data," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 169(3), pages 571-584, July.
    2. Inkmann, J., 2005. "Inverse Probability Weighted Generalised Empirical Likelihood Estimators : Firm Size and R&D Revisited," Discussion Paper 2005-131, Tilburg University, Center for Economic Research.
    3. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    4. Jeffrey M. Wooldridge, 2002. "Inverse probability weighted M-estimators for sample selection, attrition, and stratification," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 1(2), pages 117-139, August.
    5. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    6. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    7. Souleles, Nicholas S, 2004. "Expectations, Heterogeneous Forecast Errors, and Consumption: Micro Evidence from the Michigan Consumer Sentiment Surveys," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(1), pages 39-72, February.
    8. William Poole, 2004. "Inflation signals and inflation noise," Speech 19, Federal Reserve Bank of St. Louis.
    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. Michael Ehrmann & Damjan Pfajfar & Emiliano Santoro, 2017. "Consumers' Attitudes and Their Inflation Expectations," International Journal of Central Banking, International Journal of Central Banking, vol. 13(1), pages 225-259, February.
    2. Carlos Madeira & Basit Zafar, 2015. "Heterogeneous Inflation Expectations and Learning," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(5), pages 867-896, August.
    3. Olivier Armantier & Scott Nelson & Giorgio Topa & Wilbert van der Klaauw & Basit Zafar, 2016. "The Price Is Right: Updating Inflation Expectations in a Randomized Price Information Experiment," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 503-523, July.
    4. Duca, Ioana A. & Kenny, Geoff & Reuter, Andreas, 2018. "Inflation expectations, consumption and the lower bound: micro evidence from a large euro area survey," Working Paper Series 2196, European Central Bank.
    5. Larsen, Vegard H. & Thorsrud, Leif Anders & Zhulanova, Julia, 2021. "News-driven inflation expectations and information rigidities," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 507-520.
    6. Golden, Brian & Monks, Allen, 2009. "Measuring Inflation Expectations in the Euro Area," Quarterly Bulletin Articles, Central Bank of Ireland, pages 67-84, January.
    7. Carlos Madeira & Basit Zafar, 2012. "Heterogeneus Inflation Expectations Learning and Market Outcomes," Working Papers Central Bank of Chile 667, Central Bank of Chile.

    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. William H. Greene & David A. Hensher, 2008. "Modeling Ordered Choices: A Primer and Recent Developments," Working Papers 08-26, New York University, Leonard N. Stern School of Business, Department of Economics.
    2. Nicoletti, Cheti, 2008. "Multiple sample selection in the estimation of intergenerational occupational mobility," ISER Working Paper Series 2008-20, Institute for Social and Economic Research.
    3. Newell, Andrew & Reilly, Barry, 2001. "The gender pay gap in the transition from communism: some empirical evidence," Economic Systems, Elsevier, vol. 25(4), pages 287-304, December.
    4. Farshid Vahid & Pushkar Maitra, 2005. "The Effect of Household Characteristics on Living Standards in South Africa 1993 - 98: A Quantile Regression Analysis with Sample Attrition," ANU Working Papers in Economics and Econometrics 2005-452, Australian National University, College of Business and Economics, School of Economics.
    5. Jacob A. Bikker & Laura Spierdijk & Paul Finnie, 2006. "The Impact of Bank Size on Market Power," DNB Working Papers 120, Netherlands Central Bank, Research Department.
    6. Son K. Lam & Thomas E. DeCarlo & Ashish Sharma, 2019. "Salesperson ambidexterity in customer engagement: do customer base characteristics matter?," Journal of the Academy of Marketing Science, Springer, vol. 47(4), pages 659-680, July.
    7. Stolowy, Hervé & Jeanjean, Thomas & Erkens, Michael, 2011. "The economic consequences of increasing the international visibility of financial reports," HEC Research Papers Series 957, HEC Paris.
    8. Renneboog, L.D.R. & Szilagyi, P.G., 2009. "Shareholder Activism through the Proxy Process," Other publications TiSEM cc25d736-2965-4511-b100-1, Tilburg University, School of Economics and Management.
    9. Ito, Keiko, 2004. "Foreign ownership and plant productivity in the Thai automobile industry in 1996 and 1998: a conditional quantile analysis," Journal of Asian Economics, Elsevier, vol. 15(2), pages 321-353, April.
    10. Zhang, Yeqing & Zhang, Xueyong, 2020. "Patent growth and the long-run performance of VC-backed IPOs," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 33-47.
    11. P.W. Miller & S. Rummery, 1989. "Gender Wage Discrimination in Australia: A reassessment," Economics Discussion / Working Papers 89-21, The University of Western Australia, Department of Economics.
    12. Marcus Asplund, 2000. "What Fraction of a Capital Investment is Sunk Costs?," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 287-304, September.
    13. S. Seo, 2014. "Estimating Tropical Cyclone Damages Under Climate Change in the Southern Hemisphere Using Reported Damages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(3), pages 473-490, July.
    14. Branisa, Boris & Peres-Cajías, Jose & Caspa, Nigel, 2020. "The biological standard of living in La Paz (Bolivia), 1880s–1920s: Persistent stagnation and inequality," Economics & Human Biology, Elsevier, vol. 37(C).
    15. Aynur Pala, 2014. "The Effect of Valuation Ratios, Gold Price, and Petroleum Price on Equity Returns: A Comparison of Static Panel and Quantile Regressions," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(1), pages 80-89, January.
    16. Wang, Wen & Lien, Donald, 2018. "Union membership, union coverage and wage dispersion of rural migrants: Evidence from Suzhou industrial sector," China Economic Review, Elsevier, vol. 49(C), pages 96-113.
    17. Christensen, Björn, 2002. "Reservation wages, offered wages, and unemployment duration: new empirical evidence," Kiel Working Papers 1095, Kiel Institute for the World Economy (IfW Kiel).
    18. Ongena, Steven & Popov, Alexander & Udell, Gregory F., 2013. "“When the cat's away the mice will play”: Does regulation at home affect bank risk-taking abroad?," Journal of Financial Economics, Elsevier, vol. 108(3), pages 727-750.
    19. João Pereira & Aurora Galego, 2014. "Inter-Regional Wage Differentials in Portugal: An Analysis Across the Wage Distribution," Regional Studies, Taylor & Francis Journals, vol. 48(9), pages 1529-1546, September.
    20. Sarah Brown & Karl Taylor, 2008. "Household debt and financial assets: evidence from Germany, Great Britain and the USA," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 171(3), pages 615-643, June.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:man:cgbcrp:99. 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: Patrick Macnamara (email available below). General contact details of provider: https://edirc.repec.org/data/semanuk.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.