Heterogeneity in the Formation of Inflation Expectations: Evidence from Micro Data

Olena Kostyshyna, Isabelle Salle and Hung Truong
Additional contact information
Olena Kostyshyna: Bank of Canada
Isabelle Salle: University of Amsterdam
Hung Truong: University of Ottawa

No 26-036/VI, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Using micro-level data from the Canadian Survey of Consumer Expectations and a heterogeneous expectations model, we characterize the heterogeneity in inflation expectation formation among households across inflation regimes and demographic groups. We show that the recent inflation surge not only increased the level and dispersion of inflation expectations, but also altered expectation formation itself, with marked demographic heterogeneity and more widespread trend-chasing behavior than before the pandemic. Furthermore, only when inflation is high are these trend- chasing behaviors associated with higher expectations for a wide range of economic variables in the short and the long run, concerns about monetary policy, and restrained household spending along weak real wage expectations. Our micro-based insights show how an inflation surge broadly ‘scars’ forecasting behaviors, which poses a challenge for completing the ‘last mile’ of disinflation.

JEL-codes: D84 E31 E70 (search for similar items in EconPapers)
Date: 2026-06-19
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.tinbergen.nl/26036.pdf (application/pdf)

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:tin:wpaper:20260036

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().