Inflation Expectations in India: Learning from Household Tendency Surveys

Abhiman Das, Kajal Lahiri and Yongchen Zhao
Additional contact information
Abhiman Das: Indian Institute of Management Ahmedabad

No 2018-03, Working Papers from Towson University, Department of Economics

Abstract: Using a large household survey conducted by the Reserve Bank of India since 2005, we estimate the dynamics of aggregate inflation expectations over a volatile inflation regime. A simple average of the quantitative responses produces biased estimates of the official inflation data. We therefore estimate expectations by quantifying the reported directional responses. For quantification, we use the Hierarchical Ordered Probit model, in addition to the balance statistic. We find that the quantified expectations from qualitative forecasts track the actual inflation rate better than the averages of the quantitative forecasts, highlighting the filtering role of qualitative tendency surveys. We also report estimates of disagreement among households. The proposed approach is particularly suitable in emerging economies where inflation tends to be high and volatile.

Keywords: Hierarchical ordered probit model; Quantification; Tendency survey; Disagreement; Indian inflation. (search for similar items in EconPapers)
JEL-codes: C25 D84 E3 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2018-08, Revised 2018-08
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://webapps.towson.edu/cbe/economics/workingpapers/2018-03.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: Inflation expectations in India: Learning from household tendency surveys (2019)
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:tow:wpaper:2018-03

Access Statistics for this paper

More papers in Working Papers from Towson University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Juergen Jung ().