The role of information and experience for households' inflation expectations

Christian Conrad, Zeno Enders and Alexander Glas

No 07/2021, Discussion Papers from Deutsche Bundesbank

Abstract: Based on a new survey of German households, we investigate the role that information channels and lifetime experience play in households' inflation expectations. We show that the types of information channels that households use to inform themselves about monetary policy are closely related to their socioeconomic characteristics. These information channels, in turn, have a major influence on the level of perceived past and expected future inflation, as well as on the uncertainty thereof. The expected future change in inflation and the unemployment rate, however, is strongly influenced by individual experience of these variables. Similarly, the expected response of inflation to a change in the interest rate is also shaped by experience. We propose the interpretation that households obtain inflation numbers from the media, but their 'economic model' is shaped by experience.

Keywords: Household expectations; inflation expectations; information channels; experience; Bundesbank household survey (search for similar items in EconPapers)
JEL-codes: D84 E31 E71 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The role of information and experience for households’ inflation expectations (2022)
Working Paper: The role of information and experience for households' inflation expectations (2021)
Working Paper: The Role of Information and Experience for Households' Inflation Expectations (2020)
Working Paper: The role of information and experience for households' inflation expectations (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:072021

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