Special Issue Article on ‘Measurement and Analysis of Subjective Expectations’
Measuring consumer uncertainty about future inflation
Article first published online: 23 MAR 2011
Copyright © 2011 John Wiley & Sons, Ltd.
Journal of Applied Econometrics
Special Issue: Measurement and Analysis of Subjective Expectations
Volume 26, Issue 3, pages 454–478, April/May 2011
How to Cite
De Bruin, W. B., Manski, C. F., Topa, G. and van der Klaauw, W. (2011), Measuring consumer uncertainty about future inflation. J. Appl. Econ., 26: 454–478. doi: 10.1002/jae.1239
- Issue published online: 23 MAR 2011
- Article first published online: 23 MAR 2011
We introduce a survey-based measure of uncertainty about future inflation, asking consumers for density forecasts across inflation outcomes. Consumers are willing and able to express uncertainty, showing high response rates and response patterns that are reliably related to qualitative measures of uncertainty. Heterogeneity in expressed uncertainty is associated with demographic characteristics and financial literacy, and measures of central tendency derived from density forecasts are strongly correlated with point forecasts. Furthermore, expressed uncertainty is positively related to point forecast levels and to larger revisions in point forecasts over time. Copyright © 2011 John Wiley & Sons, Ltd.