Quantifying Inflation Expectations with the Carlson-Parkin Method - A Survey-based Determination of the Just Noticeable Difference

Henzel, Steffen; Wollmershaeuser, Timo

doi:10.2139/ssrn.870466

Cited by 6 publications

(7 citation statements)

References 13 publications

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“…Overall, these results suggest that the response scheme systematically differs across income-groups, which implies that Assumption 2 is violated. 22 20 This finding is consistent with Henzel and Wollmershäuser (2005) who investigate data from a special edition of the ifo World Economic Survey that directly asks respondents to indicate the indifference interval. Henzel and Wollmershäuser (2005) report that the positive threshold parameter is larger in absolute terms than the negative parameter.…”

Section: Homogeneity Of the Response Schemesupporting

confidence: 72%

“…22 20 This finding is consistent with Henzel and Wollmershäuser (2005) who investigate data from a special edition of the ifo World Economic Survey that directly asks respondents to indicate the indifference interval. Henzel and Wollmershäuser (2005) report that the positive threshold parameter is larger in absolute terms than the negative parameter. As opposed to the Swedish survey, however, the ifo survey queries professional forecasters and answers are given on a 3-category ordinal scale.…”

Section: Homogeneity Of the Response Schemesupporting

confidence: 72%

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On the Accuracy of the Probability Method for Quantifying Beliefs About Inflation

Maag

2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThis paper assesses the probability method for quantifying EU consumer survey data on perceived and expected inflation. Based on household level data from the Swedish consumer survey that asks for both qualitative and quantitative responses, it is found that the theoretical assumptions of the method do not hold. In particular, estimates of unrestricted response schemes indicate that response intervals are asymmetric and that qualitative inflation expectations are formed relative to perceptions of current inflation. Nevertheless, the probability method generates series that are highly correlated with the mean of actual quantitative beliefs. For quantifying the cross-sectional dispersion of beliefs, however, an index of qualitative variation is most accurate.JEL classification: C53, D84, E31.

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Section: Homogeneity Of the Response Schemesupporting

confidence: 72%

Section: Homogeneity Of the Response Schemesupporting

confidence: 72%

On the Accuracy of the Probability Method for Quantifying Beliefs About Inflation

Maag

2009

SSRN Journal

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“…Applying this insight to a numeric setting, such as perceptions of the price level, it means that individuals are insensitive to small changes in prices up to a certain threshold that is proportional to the initial price level-that is, individuals are insensitive to inflation up to a certain rate threshold. Some authors have found mixed results for the jnd in inflation expectations using different methods and different survey instruments (see, for example, Henzel andWollmershauser 2005, andearlier work by Batchelor 1986). Our results are consistent with the jnd,…”

Section: Discussionmentioning

confidence: 99%

Inflation Thresholds and Inattention

Bracha¹,

Tang²

2019

Federal Reserve Bank of Boston Research Department Working Papers

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Inflation expectations are key to economic activity, and in the current economic climate of a heated labor market, they are central to the policy debate. At the same time, a growing literature on inattention suggests that individuals, and therefore individual behavior, may not be sensitive to changes in inflation when it is low. This paper explores evidence of such inattention by constructing three different measures based on the University of Michigan's Survey of Consumers 1-year ahead inflation expectations. Exploring inflation thresholds of 2, 3, and 4 percent, our findings are consistent with the inattention hypothesis.

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“…Despite the instantaneous and free availability, the WES survey data have only been used by a small number of studies. Henzel and Wollmershäuser (2005) develop a new methodology to elicit inflation expectations from the WES. For 43 countries and two country aggregates, the paper by Kudymowa, Plenk, and Wohlrabe (2013) assesses the in-sample performance of the WES economic climate as a business cycle indicator.…”

Section: Introductionmentioning

confidence: 99%

Forecasting GDP all over the world using leading indicators based on comprehensive survey data

2019

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Comprehensive and international comparable leading indicators across countries and continents are rare. In this paper, we use a free and instantaneous available source of leading indicators, the ifo World Economic Survey (WES), to forecast growth of Gross Domestic Product (GDP) in 44 countries and three country aggregates separately. We come up with three major results. First, for more than three-fourths of the countries or country-aggregates in our sample, a model containing one of the major WES indicators produces on average lower forecast errors compared to a benchmark model. Second, the most important WES indicators are either the economic climate or the expectations on future economic development for the next six months. And third, adding the WES indicators of the main trading partners leads to a further increase in forecast accuracy in more than 50% of the countries. It seems therefore reasonable to incorporate economic signals from the domestic economy's main trading partners.

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Quantifying Inflation Expectations with the Carlson-Parkin Method - A Survey-based Determination of the Just Noticeable Difference

Cited by 6 publications

References 13 publications

On the Accuracy of the Probability Method for Quantifying Beliefs About Inflation

On the Accuracy of the Probability Method for Quantifying Beliefs About Inflation

Inflation Thresholds and Inattention

Forecasting GDP all over the world using leading indicators based on comprehensive survey data

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