The Citizen's Judgements of Prices and Inflation

Ranyard, Rob; Missier, Fabio Del; Bonini, Nicolao; Pietroni, Davide

doi:10.1002/9781118926352.ch10

Cited by 3 publications

(3 citation statements)

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“…A second difference is that only lay people draw on their own personal experience of price changes when forecasting inflation. As a result, differences in personal experience contribute to the greater heterogeneity observed in their inflation expectations (Bates and Gabor, 1986;Brachinger, 2008;Jungermann, Brachinger, Belting, Grinberg and Zacharias, 2007;Lein and Maag, 2011;Madeira and Zafar, 2015;Malmendier and Nagel, 2016;Ranyard, Missier, Bonini and Pietroni, 2018).…”

Section: Inflation Expectationsmentioning

confidence: 99%

Context effects in inflation surveys: The influence of additional information and prior questions

Niu

Harvey

2022

International Journal of Forecasting

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Section: Inflation Expectationsmentioning

confidence: 99%

Context effects in inflation surveys: The influence of additional information and prior questions

Niu

Harvey

2022

International Journal of Forecasting

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“…This fact is considered a significant and under-explored research gap in existing literature. Meanwhile, various theories offer possible explanations for the mechanisms behind the formation of inflation perceptions, spanning from extensions of the rational perception model to behavioral economics theories (Wärneryd, 1986;Brachinger, 2008;Gnan et al, 2010;Ranyard et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

Psychological inflation: Definition and measurement

Pham,

Nguyen,

2024

JEECAR

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Conventional monetary policy tools became less effective, with nominal short-term interest rates approaching the zero-lower bound during COVID-19. Instead, central banks adopted a range of unconventional monetary policies. Thus, perceived inflation has become a key channel for monetary policy transmission. Despite how vital perceived inflation is, quantifying perceived inflation with accuracy remains questionable and challenging. As a result, we focus on developing a novel measurement of perceived inflation - the psychological inflation index. Our approach is based on psychological theories and considers loss aversion, which creates advancements to previous versions. The new index satisfies many expected criteria: (i) it broadly co-moves with the headline inflation index during everyday contexts; (ii) it captures abnormal price evolution better than headline inflation during crisis periods; (iii) it links tightly with monetary policy and economic dynamics. Psychological inflation, therefore, might be helpful in forecasting headline inflation, estimating real interest rates, predicting economic players' behavior, and setting salaries and prices. Psychological inflation, combined with headline inflation, provides a clearer picture of the credibility of monetary policy.

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“…Central banks need to know about these expectations because they are assumed to determine future levels of inflation. 1 In other words, they feed into the inflation forecasts made by the banks and therefore influence policy (Ranyard et al, 2017). There are various ways in which lay expectations of inflation could influence actual levels of inflation.…”

Section: Introductionmentioning

confidence: 99%