"Don't know" Tells: Calculating Non-Response Bias in Firms' Inflation Expectations Using Machine Learning Techniques

Yosuke Uno and Ko Adachi
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Yosuke Uno: Bank of Japan
Ko Adachi: Bank of Japan

No 19-E-17, Bank of Japan Working Paper Series from Bank of Japan

Abstract: This paper examines the "don't know" responses for questions concerning inflation expectations in the Tankan survey. Specifically, using machine learning techniques, we attempt to extract "don't know" responses where respondent firms are more likely to "know" in a sense. We then estimate the counterfactual inflation expectations of such respondents and examine the non-response bias based on the estimation results. Our findings can be summarized as follows. First, there is indeed a fraction of firms that respond "don't know" despite the fact that they seem to "know" something in a sense. Second, the number of such firms, however, is quite small. Third, the estimated counterfactual inflation expectations of such firms are not statistically significantly different from the corresponding official figures in the Tankan survey. Fourth and last, based on the above findings, the non-response bias in firms' inflation expectations likely is statistically negligible.

Keywords: inflation expectations; PU classification; non-response bias (search for similar items in EconPapers)
JEL-codes: C55 E31 (search for similar items in EconPapers)
Date: 2019-12-25
New Economics Papers: this item is included in nep-big, nep-cmp, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:boj:bojwps:wp19e17

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