Download or read book Exposure to Grocery Prices and Inflation Expectations written by Francesco D'Acunto and published by . This book was released on 2020 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that, when forming expectations about aggregate inflation, consumers rely on the prices of goods in their personal grocery bundles. Our analysis uses novel representative micro data that uniquely match individual expectations, detailed information about consumption bundles, and item-level prices. The data also reveal that the weights consumers assign to price changes depend on the frequency of purchase, rather than expenditure share, and that positive price changes loom larger than similar-sized negative price changes. Prices of goods offered in the same store but not purchased (any more) do not affect inflation expectations, nor do other dimensions such as the volatility of price changes. Our results provide empirical guidance for models of expectations formation with heterogeneous consumers.
Download or read book Exposure to Daily Price Changes and Inflation Expectations written by Francesco D'Acunto and published by . This book was released on 2019 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that, to form aggregate inflation expectations, consumers rely on the price changes they face in their daily lives while grocery shopping. Specifically, the frequency and size of price changes, rather than their expenditure share, matter for individuals' inflation expectations. To document these facts, we collect novel micro data for a representative US sample that uniquely match individual expectations, detailed information about consumption bundles, and item-level prices. Our results suggest that the frequency and size of grocery-price changes to which consumers are personally exposed should be incorporated in models of expectations formation. Central banks' focus on core inflation--which excludes grocery prices--to design expectations-based policies might lead to systematic mistakes.
Download or read book Inflation Expectations written by Peter J. N. Sinclair and published by Routledge. This book was released on 2009-12-16 with total page 402 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.
Download or read book Inflation Expectations Learnings and Supermarket Prices written by Alberto Cavallo and published by . This book was released on 2014 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Inflation Expectations Learning and Supermarket Prices written by Alberto F. Cavallo and published by . This book was released on 2014 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inflation expectations in household surveys tend to be vastly heterogeneous. The literature has been unable to distinguish empirically between alternative explanations, such as the existence of rational inattention (according to which individuals will not continuously gather costly information) and the use of information from personal shopping experiences (which can be diverse and inaccurate). To better understand the importance of these mechanisms, we use evidence from field experiments with nearly 10,000 subjects conducted in both a low-inflation country (the United States) and a high-inflation country (Argentina). We introduce a novel experimental design which, when combined with unique data sources, allows us to quantify how much weight individuals assign to each source of information about inflation. Our novel experimental framework addresses one of the most important concerns with survey experiments by separating genuine from spurious learning. We find that individuals are highly influenced by information on both inflation statistics and price changes of specific products. The results are consistent with rational inattention, since there is greater learning in a low-inflation setting where the stakes are lower (the United States), and also from information that is less costly to understand (individual supermarket prices). To further assess the importance of personal experiences, we conducted field experiments which combined data from actual products purchased by the subjects with their historical prices. We find that individuals form inflation expectations using their own memories about the price changes of supermarket products they buy, but those memories are nearly orthogonal to the actual price changes.
Download or read book Inflation Expectations Learning and Supermarket Prices written by Alberto Cavallo and published by . This book was released on 2016 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: Information frictions play a central role in the formation of household inflation expectations, but there is no consensus about their origins. We address this question with novel evidence from survey experiments. We document two main findings. First, individuals in lower-inflation contexts have significantly weaker priors about the inflation rate. This finding suggests that rational inattention may be an important source of information frictions. Second, cognitive limitations also appear to be a source of information frictions: even when information about inflation statistics is made readily available, individuals still place a significant weight on less accurate sources of information, such as their memories of the price changes of the supermarket products they purchase. We discuss the implications of these findings for macroeconomic models and policy-making.
Download or read book Inflation Expectations and the Supply Chain written by Elías Albagli and published by International Monetary Fund. This book was released on 2022-08-12 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that firms rely on price changes observed along their supply chain to form expectations about aggregate inflation, and that these expectations have a complete pass-through to sales prices. Leveraging a unique dataset on Chilean firms merging expectation surveys and records from the VAT and customs registries, we document that changes in prices at which firms purchase inputs inform their forecasts of the economy’s inflation. This is the case even if changes in input costs do not determine the inflation outcome. These findings reject the full-information rational-expectations hypothesis and are consistent with firms’ disagreement about future inflation and inattention to macroeconomic news, which we document for Chile. Our results from a firm-level Phillips’ curve estimation suggest that firms’ beliefs about inflation are a key determinant for their price-setting decisions. Therefore, we argue that the channel we highlight in this paper has the potential to lead to dispersion in inflation expectations, price dispersion, and weaken the expectation channel of policies.
Download or read book Handbook of Economic Expectations written by Ruediger Bachmann and published by Elsevier. This book was released on 2022-11-04 with total page 876 pages. Available in PDF, EPUB and Kindle. Book excerpt: Handbook of Economic Expectations discusses the state-of-the-art in the collection, study and use of expectations data in economics, including the modelling of expectations formation and updating, as well as open questions and directions for future research. The book spans a broad range of fields, approaches and applications using data on subjective expectations that allows us to make progress on fundamental questions around the formation and updating of expectations by economic agents and their information sets. The information included will help us study heterogeneity and potential biases in expectations and analyze impacts on behavior and decision-making under uncertainty. Combines information about the creation of economic expectations and their theories, applications and likely futures Provides a comprehensive summary of economics expectations literature Explores empirical and theoretical dimensions of expectations and their relevance to a wide array of subfields in economics
Download or read book What Do the Data Tell Us about Inflation Expectations written by Francesco D'Acunto and published by . This book was released on 2022 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inflation expectations are central to economics because they affect the effectiveness of fiscal and monetary policy as well as realized inflation. We survey the recent literature with a focus on the inflation expectations of households. We first review standard data sources and discuss their advantages and disadvantages. We then document that household inflation expectations are biased upwards, dispersed across individuals, and volatile in the time series. We also provide evidence of systematic differences by gender, income, education, and race. Turning to the underlying expectations formation process, we highlight the role of individuals' exposure to price signals in their daily lives, such as price changes in groceries, the role of lifetime experiences, and the role of cognition. We then discuss the literature that links inflation expectations to economic decisions at the individual level, including consumption-savings and financial decisions. We conclude with an outlook for future research.
Download or read book Managing Inflation and Supply Chain Disruptions in the Global Economy written by Akkucuk, Ulas and published by IGI Global. This book was released on 2022-08-15 with total page 378 pages. Available in PDF, EPUB and Kindle. Book excerpt: As the COVID-19 pandemic comes to a close, inflation has revealed itself to be a major problem for all countries of the developed world. The problem has been exacerbated in developing nations, which had problems even before the pandemic. Energy prices have increased, and with the increase in transportation costs, it has been more difficult for many retailers to stock shelves as they did before the pandemic. It is understood by many that the rising prices and supply chain disruptions will likely not be temporary and must be managed by future executives. Managing Inflation and Supply Chain Disruptions in the Global Economy uncovers the many ways businesses can manage this new phenomenon. It discusses global crises and their effects on the global economy in terms of inflation and supply chain. Covering topics such as inflationist impact, crisis leadership, and deglobalization, this premier reference source is an essential resource for economists, supply chain specialists, government officials, consultants, business leaders and executives, logistics professionals, IT managers, students and educators of higher education, researchers, and academicians.
Download or read book Consumers and Food Price Inflation written by Randy Schnepf and published by Createspace Independent Pub. This book was released on 2012-11-22 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Record Midwest heat in June and July (2012) sparked the worst U.S. drought since 1956, causing damage to major field crops. This situation has contributed to record U.S. prices for corn and soybeans in both cash and futures markets in 2012, and has fanned the fears of food price inflation reminiscent of 2008. The heightened commodity price volatility of 2008 and the subsequent acceleration in U.S. food price inflation associated with commodity market shifts raised concerns and generated many questions about farm and food price movements by Members of Congress and their constituents. However, historical evidence suggests that retail prices for processed food products are driven more by consumer demand (strongly linked to general economic conditions), than by price changes in raw commodity markets, although this linkage varies with the degree of raw commodity content in the retail product. This report focuses instead on the nature and measurement of retail food price inflation and its relationship to consumers. During the 1991 to 2006 period, U.S. food prices were fairly stable—annual food price inflation, as measured by the Consumer Price Index (CPI) for all food (excluding alcoholic beverages), averaged a relatively low 2.5%. However, several economic factors emerged in late 2005 that began to gradually push market prices higher for both raw agricultural commodities and energy costs, and ultimately retail food prices. U.S. food price inflation increased at a rate of 4% in 2007 and at 5.5% in 2008—the highest since 1990 and well above the general inflation rate of 3.8%. The situation of sharply rising prices came to a sudden halt in late 2008 when the financial crisis hit U.S. markets leading to a severe economic recession. Annual food price inflation dropped to 1.8% in 2009 and 0.8% in 2010, before rising to 3.7% in 2011 driven by improving U.S. and global economic conditions. USDA projects that annual food price inflation will range from 2.5% to 3.5% in 2012 and rise to 3%-4% in 2013. The All-Food CPI has two components—food-at-home and food-away-from-home. The food-at home CPI is most representative of retail food prices and is significantly more volatile than the food-away-from-home index. The food-at-home CPI is projected in a range of 3% to 4% for 2013, compared with a 2.5% to 3.5% annual inflation rate for food-away-from home prices. This difference is partially explained by the larger share of farm products in the final price of retail foods than in food-away-from home. Farm product prices are, in general, substantially more volatile than the other marketing and processing costs that enter into retail or ready-to-eat foods. Many wages and salaries, as well as federal programs (including several domestic food assistance programs), are linked to price inflation through escalation clauses in order to retain consumer purchasing power. For households where income and federal benefits do not keep up with price inflation, declines in purchasing power are real and immediate. However, even for households with escalation clauses, a time lag usually occurs between the time the price inflation is measured and the time when the wage or program benefit is adjusted upward to compensate. The 2008-2009 global economic crisis—which involved higher retail prices and unemployment, income loss, and lower effective household purchasing power—resulted in higher participation rates in the federal food and nutrition programs since then. As a result, USDA's food and nutrition assistance programs have seen a tremendous expansion in use—federal expenditures totaled $103.3 billion in FY2011 and marked the 11th consecutive year in which food and nutrition assistance expenditures exceeded the previous historical record. Since FY2000, expenditures for food and nutrition assistance have more than tripled.
Download or read book Inflated Concerns Exposure to Past Inflationary Episodes and Preferences for Price Stability written by Mr. Nicolas E Magud and published by International Monetary Fund. This book was released on 2024-03 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using individual-level survey data for both advanced economies and emerging markets spanning over 45 years for 42 countries, we show that cohorts who have had higher exposure to past inflationary episodes (levels, as well as to more persistent or to more volatile inflation), systematically express higher concerns over rising prices. The link between past high inflation exposure and expressed concerns over price stability is particularly strong when an individual’s exposure occurs in the latter part of her working-age (as in lifecycle theory). The impact of past exposure to high inflation on contemporaneous preferences over price stability increases when surveyed in the midst of high ongoing inflation and with macroeconomic instability (as measured by GDP growth volatility), but diminishes with the quality of institutions.
Download or read book Inflation Expectations and Stock Prices written by William Edward Gibson and published by . This book was released on 1971 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Price level Targeting and Inflation Expectations written by Robert Amano and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Kyrgyz Republic written by International Monetary Fund. Middle East and Central Asia Dept. and published by International Monetary Fund. This book was released on 2024-03-04 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Kyrgyz Republic: Selected Issues
Download or read book Household Inflation Expectations and the Price of Oil written by Bharat Trehan and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Consumers and Food Price Inflation written by Randall Dean Schnepf and published by . This book was released on 2015 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
