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Measuring consumer inflation expectations in Europe and examining their forward-lookingness

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  • Lyziak, Tomasz

Abstract

This paper presents numerical measures of European consumers’ inflation expectations derived on the basis of European Commission qualitative survey data with different quantification methods, i.e. with the probability method, the regression method and the logistic (and linear) function method. The study aims at assessing differences between those measures and the resulting uncertainty in measuring inflation expectations of this group of economic agents. Moreover, in the empirical part of the paper the formation of expectations by consumers in European economies is examined, with a particular focus on estimating the degree of forward-lookingness of expectations.

Suggested Citation

  • Lyziak, Tomasz, 2009. "Measuring consumer inflation expectations in Europe and examining their forward-lookingness," MPRA Paper 18890, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:18890
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    References listed on IDEAS

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    1. Smith, Jeremy & McAleer, Michael, 1995. "Alternative Procedures for Converting Qualitative Response Data to Quantitative Expectations: An Application to Australian Manufacturing," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 165-185, April-Jun.
    2. Fair, Ray C, 1993. "Testing Macroeconomic Models," American Economic Review, American Economic Association, vol. 83(2), pages 287-293, May.
    3. Paolo Del Giovane & Roberto Sabbatini, 2004. "L�introduzione dell�euro e la divergenza tra infl azione rilevata e percepita," Temi di discussione (Economic working papers) 532, Bank of Italy, Economic Research and International Relations Area.
    4. Magnus Forsells & Geoff Kenny, 2004. "Survey Expectations, Rationality and the Dynamics of Euro Area Inflation," Journal of Business Cycle Measurement and Analysis, OECD Publishing, Centre for International Research on Economic Tendency Surveys, vol. 2004(1), pages 13-41.
    5. Manfred Fluch & Helmut Stix, 2005. "Perceived Inflation in Austria – Extent, Explanations, Effects," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 22-47.
    6. Fair, Ray C, 1993. "Testing the Rational Expectations Hypothesis in Macroeconometric Models," Oxford Economic Papers, Oxford University Press, vol. 45(2), pages 169-190, April.
    7. repec:bla:econom:v:55:y:1988:i:219:p:317-31 is not listed on IDEAS
    8. Jan Marc Berk, 1999. "Measuring inflation expectations: a survey data approach," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1467-1480.
    9. Slacalek, Jirka & Fritsche, Ulrich & Dovern, Jonas & Döpke, Jörg, 2005. "European inflation expectations dynamics," Discussion Paper Series 1: Economic Studies 2005,37, Deutsche Bundesbank.
    10. Francisco Dias & Cláudia Duarte & António Rua, 2010. "Inflation (mis)perceptions in the euro area," Empirical Economics, Springer, vol. 39(2), pages 353-369, October.
    11. Jonung, Lars, 1986. "Uncertainty about inflationary perceptions and expectations," Journal of Economic Psychology, Elsevier, vol. 7(3), pages 315-325, September.
    12. repec:bla:econom:v:42:y:1975:i:166:p:123-38 is not listed on IDEAS
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    Cited by:

    1. Snezana Eminidou & Marios Zachariadis & Elena Andreou, 2020. "Inflation Expectations and Monetary Policy Surprises," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(1), pages 306-339, January.
    2. Tomasz Lyziak, 2014. "Inflation expectations in Poland, 2001–2013. Measurement and macroeconomic testing," NBP Working Papers 178, Narodowy Bank Polski.
    3. Eminidou, Snezana & Geiger, Martin & Zachariadis, Marios, 2023. "Public debt and state-dependent effects of fiscal policy in the euro area," Journal of International Money and Finance, Elsevier, vol. 130(C).

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    More about this item

    Keywords

    Inflation Expectations; Consumers; Survey; EU;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods

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