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Householders’ Inflation Expectations

Author

Listed:
  • Andrea Brischetto

    (Reserve Bank of Australia)

  • Gordon de Brouwer

    (Reserve Bank of Australia)

Abstract

Inflation expectations have wide-reaching effects on the macroeconomy and are an important part of the transmission of monetary policy. This paper analyses the Melbourne Institute survey of householders’ inflation expectations. Householders’ average inflation expectations vary with personal characteristics. People with better access to information or more developed information-processing skills – such as professionals, those with more education, or older people – tend to have lower and more accurate inflation expectations. While inflation expectations are not correlated with the structural determinants of inflation (like the output gap, exchange rate movements or wages growth), tighter monetary policy does appear to reduce expected inflation. People also associate ‘good times’ with strong growth, low unemployment and low inflation. It is shown that householders’ inflation expectations do not appear to fully incorporate information about past inflation and exchange rate movements.

Suggested Citation

  • Andrea Brischetto & Gordon de Brouwer, 1999. "Householders’ Inflation Expectations," RBA Research Discussion Papers rdp1999-03, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp1999-03
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    File URL: https://www.rba.gov.au/publications/rdp/1999/pdf/rdp1999-03.pdf
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    Citations

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    Cited by:

    1. Chris Aylmer & Troy Gill, 2003. "Business Surveys and Economic Activity," RBA Research Discussion Papers rdp2003-01, Reserve Bank of Australia.
    2. Ramon Moreno & Agustin Villar, 2010. "Inflation expectations, persistence and monetary policy," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy and the measurement of inflation: prices, wages and expectations, volume 49, pages 77-92, Bank for International Settlements.
    3. Mardi Dungey & John Pitchford, 2000. "The Steady Inflation Rate of Economic Growth," The Economic Record, The Economic Society of Australia, vol. 76(235), pages 386-400, December.
    4. Krekó, Judit & Vonnák, Balázs, 2003. "Makroelemzők inflációs várakozásai Magyarországon [The inflationary expectations of macro analysts in Hungary]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 315-334.

    More about this item

    Keywords

    inflation expectations;

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

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