Updating Inflation Expectations

KOF Working Paper No. 301

Michael J. Lamla, Samad Sarferaz

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Abstract

This paper investigates how inflation expectations evolve. In particular, we analyze the time-varying nature of the propensity to update expectations and its potential determinants. For this purpose we set up a flexible econometric model that tracks the formation of inflation expectations of consumers at each moment in time. We show that the propensity to update inflation expectations changes substantially over time and is related to the quantity and the quality of news.

Suggested Citation:

Lamla, M.J. and S. Sarferaz (2012): Updating Inflation Expectations, KOF Working Papers No. 301, March, Zurich.

Published as

Lamla, M.J. and S. Sarferaz (2012): Updating Inflation Expectations, European Economic Association Meeting, Malaga , Spanien, July 29.
Lamla, M.J. and S. Sarferaz (2012): Updating Inflation Expectations, Research Seminar, Heidelberg, Germany, June 18.
Lamla, M.J. and S. Sarferaz (2012): Updating Inflation Expectations, Workshop Models of Expectation Formation and the Role of the News Media for Information Transmission, Hamburg, Germany, June 14.
Lamla, M.J. and S. Sarferaz (2012): Updating Inflation Expectations, Workshop Survey Data Analysis, Kiel, Germany, March 15.

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