Households' probabilistic inflation expectations in high-inflation regimes

Christoph Becker, Peter Dürsch, Thomas A. Eife and Alexander Glas

No 23-072, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Central bank surveys frequently elicit households' probabilistic beliefs about future inflation. However, most household surveys use a response scale that is tailored towards low-inflation regimes. Using data from a randomized controlled trial included in the Bundesbank Online Panel Households, we show (i) that keeping the original scale in high-inflation regimes distorts estimates of histogram moments and forces households to provide probabilistic expectations that are inconsistent with the point forecasts and (ii) how shifting the scale improves the consistency of predictions by allowing respondents to state more detailed beliefs about higher inflation ranges. We also explore potential disadvantages of adjusting the response scale.

Keywords: Probabilistic expectations; inflation; survey data (search for similar items in EconPapers)
JEL-codes: D84 E31 E58 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-cba, nep-exp and nep-mon
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Working Paper: Households' probabilistic inflation expectations in high-inflation regimes (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:283596

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