News on Inflation and the Epidemiology of Inflation Expectations

Damjan Pfajfar and Emiliano Santoro

Journal of Money, Credit and Banking, 2013, vol. 45, issue 6, 1045-1067

Abstract: This paper examines the nexus between news coverage on inflation and households’ inflation expectations. In doing so, we test the epidemiological foundations of the sticky information model (Carroll ). We use both aggregate and household‐level data from the Survey Research Center at the University of Michigan. We highlight a fundamental disconnection among news on inflation, consumers’ frequency of expectation updating, and the accuracy of their expectations. Our evidence provides at best weak support to the epidemiological framework, as most of the consumers who update their expectations do not revise them toward professional forecasters’ mean forecast.

Date: 2013
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https://doi.org/10.1111/jmcb.12043

Related works:
Journal Article: News on Inflation and the Epidemiology of Inflation Expectations (2013)
Working Paper: News on Inflation and the Epidemiology of Inflation Expectations (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:45:y:2013:i:6:p:1045-1067

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