Working Paper: NBER ID: w15388
Authors: David G. Blanchflower; Conall Maccoille
Abstract: This paper uses micro-data from three surveys for the UK to consider how individuals form inflation expectations. Generally, we find significant non-response bias in all surveys, with non-respondents especially likely to be young, female, less educated and with lower incomes. A number of demographic generalizations can be made based on the surveys. Inflation expectations rise with age, but the more highly educated and home owners tend to have lower inflation expectations. These groups are also more likely to be accurate in their estimates of official inflation twelve months ahead, and have less backward-looking expectations.
Keywords: Inflation expectations; UK; Demographic factors; Monetary policy
JEL Codes: E4; E5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| current inflation perceptions (E31) | future inflation expectations (E31) |
| demographics (J11) | inflation expectations (E31) |
| credibility of Bank of England (E58) | inflation expectations (E31) |
| age (J14) | inflation expectations (E31) |
| education (I29) | inflation expectations (E31) |