News on Inflation and the Epidemiology of Inflation Expectations

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningfagfællebedømt

This paper examines the nexus between news coverage on inflation and households’ inflation expectations. In doing so, we test the epidemiological foundations of the sticky information model (Carroll ). We use both aggregate and household-level data from the Survey Research Center at the University of Michigan. We highlight a fundamental disconnection among news on inflation, consumers’ frequency of expectation updating, and the accuracy of their expectations. Our evidence provides at best weak support to the epidemiological framework, as most of the consumers who update their expectations do not revise them toward professional forecasters’ mean forecast.
OriginalsprogEngelsk
TidsskriftJournal of Money, Credit and Banking
Vol/bind45
Udgave nummer6
Sider (fra-til)1045–1067
ISSN0022-2879
DOI
StatusUdgivet - 2013

Bibliografisk note

JEL Classification: C53;D84;E31

ID: 43214044