Disagreement and Biases in Inflation Expectations of Japanese Households(in Japanese)

Yuko Ueno and Ryoichi Namba

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: This study examines how Japanese consumers’ inflation expectations are formed by the use of micro-level dataset of the prediction error of expected inflation rate. Recently in Japan, the interest is growing in the policies that intend to work on the inflation expectations of consumers and firms. Effects of such policy depend on expectation formation mechanism of economic agents. In particular, whether expectations are rational or adaptive, homogenous or heterogenous is an important factor that affects its effectiveness. We examine underlying mechanism of Japanese consumers’ inflation expectations by analyzing the raw data of “Consumer Confidence Survey”. From the data, we find that both statistically significant upward bias and disagreement among households exist in a persistent manner. Our study shows that“Model of asymmetric cost of forecast error” is consistent with this upward bias, while a gap remains from the level of rational expectation. In addition, we offer the empirical evidence that expectation heterogeneity among various groups can be explained with their characteristics only to a limited extent. Among others, we find that the age effect on inflation expectations looks inverted U-shaped.

Pages: 39 pages
Date: 2013-07
New Economics Papers: this item is included in nep-mac and nep-mon
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.esri.go.jp/jp/archive/e_dis/e_dis300/e_dis300.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.esri.go.jp:80 (No such host is known. )

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:esj:esridp:300

Access Statistics for this paper

More papers in ESRI Discussion paper series from Economic and Social Research Institute (ESRI) Contact information at EDIRC.
Bibliographic data for series maintained by HORI nobuko ( this e-mail address is bad, please contact ).