Epidemiology of inflation expectations and internet search: an analysis for India

Abstract

This paper investigates how inflation expectations of individuals are formed in India. We investigate if the news on inflation plays a role in the formation of inflation expectations following the epidemiology-based work by Carroll (2003). The standard literature on this topic considers news coverage by the print and audiovisual media as the sources of formation of inflation expectations. Instead, we consider the Internet as a potential common source of information based on which agents form their expectations about future inflation. Based on data extracted from Google Trends, our results indicate that during the period 2006 to 2018, the Internet has indeed been a common source of information based on which agents have formed their expectations about future inflation, and the Internet search sentiment has had some impact on inflation expectations. Additionally, based on the inflation expectations series derived from the Google Trends data, we find that there is presence of "information stickiness" in the system since only a small fraction of the population update their inflation expectations each period.

The Neo-Fisherianism to Escape Zero Lower Bound

“…(2015) has shown news published in leading Chinese news paper and magazine has impact on household in ‡ation expectations of China. Using same theory of epidemiology, Saakshi, et. al.…”