Household Inflations Expectations Project
Inflation expectations are at the center of modern macro-economic models and monetary policy. Nonetheless, consumer expectations are poorly measured and their foundations are not well understood. The Microeconomic Data Center affiliates, together with academic economists and behavioral psychologists, have devoted considerable attention to improving the measurement and understanding of consumer inflation expectations. The goals of this project are threefold: (1) develop better measures (questions) to elicit consumer inflation expectations, (2) study the link between expectations and behavior, and (3) understand how households form inflation expectations. Individual-level data are critical to providing us with the ability to improve the questions we ask, and to examine such important phenomena as the heterogeneity in beliefs across agents, and the confidence that individuals have in the forecasts of economic phenomena. For this purpose, we have administered a basic survey module to a panel of consumers through the RAND American Life Panel, roughly every 6 weeks since the end of 2007. We also periodically design special modules administered to different samples (also through the RAND American Life Panel) to analyze specific aspects of inflation expectations formation and updating. Findings from this project have been instrumental in the creation and design of our new Survey of Consumer Expectations.
Olivier Armantier, Giorgio Topa, Wilbert van der Klaauw, Basit Zafar.
For more information about this project, please contact us.