Households' probabilistic inflation expectations in high-inflation regimes
Central bank surveys frequently elicit households' probabilistic beliefs about future inflation. The responses provide only a coarse picture of inflation beliefs further away from zero. Using data from the Bundesbank household panel, we show that the current high-inflation environment induces r...
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| Main Authors: | , , , |
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| Format: | Book/Monograph Working Paper |
| Language: | English |
| Published: |
[Nürnberg]
Friedrich-Alexander-Universität Erlangen-Nürnberg, Institute for Economics
[2023]
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| Series: | FAU discussion papers in economics
no. 2023, 01 |
| In: |
FAU discussion papers in economics (no. 2023, 01)
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| Subjects: | |
| Online Access: | Verlag, kostenfrei: https://www.iwf.rw.fau.de/files/2023/01/01_2023.pdf Resolving-System, kostenfrei: http://hdl.handle.net/10419/268401 
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| Author Notes: | Christoph Becker, Peter Dürsch, Thomas Eife, Alexander Glas |
| Summary: | Central bank surveys frequently elicit households' probabilistic beliefs about future inflation. The responses provide only a coarse picture of inflation beliefs further away from zero. Using data from the Bundesbank household panel, we show that the current high-inflation environment induces respondents to allocate considerable probability to the rightmost open interval. This pile-up of probabilities negatively affects estimates of histogram moments and leads to a divergence between average expected inflation measured by probabilistic and point forecasts. The consistency of predictions can be improved by using an alternative design of the response scale that allows respondents to state more detailed beliefs for higher inflation ranges. |
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| Physical Description: | Online Resource |