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Modeling Consumers' Confidence and Inflation Expectations

Ashima Goyal and Prashant Parab ()
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Prashant Parab: PhD Research Scholar - Indira Gandhi Institute of Development Research

Economics Bulletin, 2019, vol. 39, issue 3, 1817-1832

Abstract: This study analyzes the socio-economic factors that influence inflation expectations of Indian households. Using Consumer Confidence Survey data we discover that inflation expectations of households depend largely on inflation perceptions, income, education of the respondents, and outlook on economy, employment and spending. Women, lower income individuals and less educated persons tend to have higher inflation expectations. Macroeconomic variables like inflation, repo rate and GDP growth rate influence inflation expectations positively. Along with these variables, inflation projections by the Reserve Bank of India play a pivotal role in influencing inflation expectations of households. A significant role of the Reserve Bank in anchoring inflation expectations via communications is visible from this analysis.

Keywords: Consumer Confidence Survey; Demographics; Ordered Logit; Central Bank Communications (search for similar items in EconPapers)
JEL-codes: D1 E5 (search for similar items in EconPapers)
Date: 2019-08-11
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