Imperfect Information and Consumer Inflation Expectations: Evidence from Microdata |
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| Authors: | Lena Dräger Michael J Lamla |
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| Affiliation: | 1. Johannes Gutenberg‐University Mainz;2. University of Essex and ETH Zurich, KOF Swiss Economic Institute |
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| Abstract: | This paper explores which factors trigger an adjustment in consumers’ inflation expectations and looks at the implications regarding forecast errors. We find support for imperfect information models, as inflation volatility and news trigger an adjustment in expectations. Furthermore, we document that individual expectations become more accurate if they have been adjusted. |
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