publication . Article . Research . 2012

Heterogeneous Inflation Expectations, Learning, and Market Outcomes

Madeira, Carlos; Zafar, Basit;
Open Access
  • Published: 01 Jan 2012 Journal: SSRN Electronic Journal (eissn: 1556-5068, Copyright policy)
  • Publisher: Elsevier BV
Abstract
Using the panel component of the Michigan Survey of Consumers, we show that individuals, in particular women and ethnic minorities, are highly heterogeneous in their expectations of inflation. We estimate a model of inflation expectations based on learning from experience that also allows for heterogeneity in both private information and updating. Our model vastly outperforms existing models of inflation expectations in explaining the heterogeneity in the data. We find that women, ethnic minorities, and less educated agents have a higher degree of heterogeneity in their private information, and are also slower to update their expectations. In addition, we show t...
Subjects
free text keywords: C53, C81, E31, E37, D83, D84, inflation expectations, imperfect information, heterogeneous expectations, learning, Inflationserwartung, Unvollkommene Information, Lernprozess, Soziale Schicht, Schätzung, USA, Private information retrieval, Ethnic group, Sticky information, Economics, Real interest rate, Perfect information, Inflation, media_common.quotation_subject, media_common, Labour economics, Personal income, ddc:330
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publication . Article . Research . 2012

Heterogeneous Inflation Expectations, Learning, and Market Outcomes

Madeira, Carlos; Zafar, Basit;