Measuring inflation expectations

Olivier Armantier, Wändi Bruine De Bruin, Simon Potter, Giorgio Topa, Wilbert Van Der Klaauw, Basit Zafar

Research output: Contribution to journalReview article

18 Citations (Scopus)

Abstract

To conduct monetary policy, central banks around the world increasingly rely on measures of public inflation expectations. In this article, we review findings from an ongoing initiative at the Federal Reserve Bank of New York aimed at improving the measurement and our understanding of household inflation expectations through surveys. We discuss the importance of question wording and the usefulness of new questions to elicit an individual's distribution of inflation beliefs. We present evidence suggesting that consumers update their inflation expectations in response to new information and that information dissemination may lead to more informed and reliable reporting of inflation expectations. Finally, we report on a financially incentivized experiment suggesting that expectations surveys are informative and that respondents generally act on their stated beliefs in a way consistent with expected utility theory.

Original languageEnglish (US)
Pages (from-to)273-301
Number of pages29
JournalAnnual Review of Economics
Volume5
DOIs
StatePublished - Jan 1 2013
Externally publishedYes

Fingerprint

Inflation expectations
Expected utility theory
Central bank
Monetary policy
Household
Survey expectations
Experiment
Usefulness
Dissemination
Inflation
Federal Reserve

Keywords

  • behavior
  • experiments
  • information
  • monetary policy
  • surveys
  • updating

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Armantier, O., De Bruin, W. B., Potter, S., Topa, G., Van Der Klaauw, W., & Zafar, B. (2013). Measuring inflation expectations. Annual Review of Economics, 5, 273-301. https://doi.org/10.1146/annurev-economics-081512-141510

Measuring inflation expectations. / Armantier, Olivier; De Bruin, Wändi Bruine; Potter, Simon; Topa, Giorgio; Van Der Klaauw, Wilbert; Zafar, Basit.

In: Annual Review of Economics, Vol. 5, 01.01.2013, p. 273-301.

Research output: Contribution to journalReview article

Armantier, O, De Bruin, WB, Potter, S, Topa, G, Van Der Klaauw, W & Zafar, B 2013, 'Measuring inflation expectations', Annual Review of Economics, vol. 5, pp. 273-301. https://doi.org/10.1146/annurev-economics-081512-141510
Armantier O, De Bruin WB, Potter S, Topa G, Van Der Klaauw W, Zafar B. Measuring inflation expectations. Annual Review of Economics. 2013 Jan 1;5:273-301. https://doi.org/10.1146/annurev-economics-081512-141510
Armantier, Olivier ; De Bruin, Wändi Bruine ; Potter, Simon ; Topa, Giorgio ; Van Der Klaauw, Wilbert ; Zafar, Basit. / Measuring inflation expectations. In: Annual Review of Economics. 2013 ; Vol. 5. pp. 273-301.
@article{2794421c2a9a48e6a05c889df9027a34,
title = "Measuring inflation expectations",
abstract = "To conduct monetary policy, central banks around the world increasingly rely on measures of public inflation expectations. In this article, we review findings from an ongoing initiative at the Federal Reserve Bank of New York aimed at improving the measurement and our understanding of household inflation expectations through surveys. We discuss the importance of question wording and the usefulness of new questions to elicit an individual's distribution of inflation beliefs. We present evidence suggesting that consumers update their inflation expectations in response to new information and that information dissemination may lead to more informed and reliable reporting of inflation expectations. Finally, we report on a financially incentivized experiment suggesting that expectations surveys are informative and that respondents generally act on their stated beliefs in a way consistent with expected utility theory.",
keywords = "behavior, experiments, information, monetary policy, surveys, updating",
author = "Olivier Armantier and {De Bruin}, {W{\"a}ndi Bruine} and Simon Potter and Giorgio Topa and {Van Der Klaauw}, Wilbert and Basit Zafar",
year = "2013",
month = "1",
day = "1",
doi = "10.1146/annurev-economics-081512-141510",
language = "English (US)",
volume = "5",
pages = "273--301",
journal = "Annual Review of Economics",
issn = "1941-1383",
publisher = "Annual Reviews Inc.",

}

TY - JOUR

T1 - Measuring inflation expectations

AU - Armantier, Olivier

AU - De Bruin, Wändi Bruine

AU - Potter, Simon

AU - Topa, Giorgio

AU - Van Der Klaauw, Wilbert

AU - Zafar, Basit

PY - 2013/1/1

Y1 - 2013/1/1

N2 - To conduct monetary policy, central banks around the world increasingly rely on measures of public inflation expectations. In this article, we review findings from an ongoing initiative at the Federal Reserve Bank of New York aimed at improving the measurement and our understanding of household inflation expectations through surveys. We discuss the importance of question wording and the usefulness of new questions to elicit an individual's distribution of inflation beliefs. We present evidence suggesting that consumers update their inflation expectations in response to new information and that information dissemination may lead to more informed and reliable reporting of inflation expectations. Finally, we report on a financially incentivized experiment suggesting that expectations surveys are informative and that respondents generally act on their stated beliefs in a way consistent with expected utility theory.

AB - To conduct monetary policy, central banks around the world increasingly rely on measures of public inflation expectations. In this article, we review findings from an ongoing initiative at the Federal Reserve Bank of New York aimed at improving the measurement and our understanding of household inflation expectations through surveys. We discuss the importance of question wording and the usefulness of new questions to elicit an individual's distribution of inflation beliefs. We present evidence suggesting that consumers update their inflation expectations in response to new information and that information dissemination may lead to more informed and reliable reporting of inflation expectations. Finally, we report on a financially incentivized experiment suggesting that expectations surveys are informative and that respondents generally act on their stated beliefs in a way consistent with expected utility theory.

KW - behavior

KW - experiments

KW - information

KW - monetary policy

KW - surveys

KW - updating

UR - http://www.scopus.com/inward/record.url?scp=84882625335&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84882625335&partnerID=8YFLogxK

U2 - 10.1146/annurev-economics-081512-141510

DO - 10.1146/annurev-economics-081512-141510

M3 - Review article

AN - SCOPUS:84882625335

VL - 5

SP - 273

EP - 301

JO - Annual Review of Economics

JF - Annual Review of Economics

SN - 1941-1383

ER -