Learning about Inflation and Exchange Rates: Beliefs and Consumer Behavior in a Small Open Economy

Diether Beuermann, Nicolas L. Bottan, Bridget Hoffmann, Jeetendra Khadan and Diego A. Vera-Cossio
Authors registered in the RePEc Author Service: Diego A. Vera Cossio

No 14620, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: We study how expert forecasts about inflation and nominal exchange rates affect households inflation perceptions, exchange rate beliefs, and later durable-goods holdings in a small open economy. Using a randomized information experiment in Suriname, we provide households with expert forecasts about future inflation and depreciation. At baseline, households substantially underestimate both inflation and depreciation, and the information treatments generate large upward revisions in expectations. Linking the experiment to follow-up data two years later, we find lower ownership of tradable durable goods among households exposed to macroeconomic forecasts, particularly consumer electronics. Results suggest that households interpret macroeconomic forecasts as informative about broader economic conditions rather than only about relative prices.

JEL-codes: D83 D90 E71 F31 (search for similar items in EconPapers)
Date: 2026-06
New Economics Papers: this item is included in nep-exp and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:14620

DOI: 10.18235/0014068

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