Household Inflation Expectations: Information Gathering, Inattentive or ‘Stubborn’?

Easaw, Joshy; Golinelli, Roberto

doi:10.2139/ssrn.2174877

SSRN Journal

2012

DOI: 10.2139/ssrn.2174877

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Household Inflation Expectations: Information Gathering, Inattentive or ‘Stubborn’?

Joshy Easaw

Roberto Golinelli

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Expectations and Uncertainty: A Common-Source Infection Model for Selected European Countries

Gerotto

Paradiso

2017

SSRN Journal

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We present a common-source infection model for explaining the formation of expectations by households. Starting from the framework of "Macroeconomic expectations of household and professional forecasters" (C.D. Carroll, The Quarterly Journal of Economics, 2003), we augment the original model assuming that also uninformed individuals are able to update expectations according to a naive econometric process. In this novel framework, a key role is played by the parameter measuring the probability of being informed: the dynamics of this factor over time capture the level of uncertainty perceived by households. This new framework is applied to study unemployment expectations for a selected group of European countries (France, Germany, Italy and the UK). Our results show that: (i) the novel framework is supported by data on unemployment expectations; and (ii) the probability of being informed is (negatively) correlated with the level of uncertainty spread by newspapers and conveyed by Internet.

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Expectations and Uncertainty: A Common-Source Infection Model for Selected European Countries

Gerotto

Paradiso

2017

SSRN Journal

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show abstract

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Household Inflation Expectations: Information Gathering, Inattentive or ‘Stubborn’?

Cited by 1 publication

References 23 publications

Expectations and Uncertainty: A Common-Source Infection Model for Selected European Countries

Expectations and Uncertainty: A Common-Source Infection Model for Selected European Countries

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