News on Inflation and the Epidemiology of Inflation Expectations

Research output: Contribution to journalJournal articlepeer-review

This paper examines the nexus between news coverage on inflation and households’ inflation expectations. In doing so, we test the epidemiological foundations of the sticky information model (Carroll ). We use both aggregate and household-level data from the Survey Research Center at the University of Michigan. We highlight a fundamental disconnection among news on inflation, consumers’ frequency of expectation updating, and the accuracy of their expectations. Our evidence provides at best weak support to the epidemiological framework, as most of the consumers who update their expectations do not revise them toward professional forecasters’ mean forecast.
Original languageEnglish
JournalJournal of Money, Credit and Banking
Volume45
Issue number6
Pages (from-to)1045–1067
ISSN0022-2879
DOIs
Publication statusPublished - 2013

Bibliographical note

JEL Classification: C53;D84;E31

ID: 43214044