Public Information and Household Expectations in Developing Countries: Evidence from a Natural Experiment

40 Pages Posted: 25 Apr 2009

See all articles by Paul E. Carrillo

Paul E. Carrillo

George Washington University - Department of Economics

M. Shahe Emran

George Washington University - Department of Economics

Date Written: April 24, 2009

Abstract

Governments provide public information about economic conditions to reduce information imperfections and facilitate efficient allocation of resources. Do households in developing countries rely on public signals to inform themselves about market conditions? To identify the importance of public information in households' price expectations, we take advantage of a unique natural experiment in Ecuador where the published inflation rate had been different from the true rate over a period of 14 months due to a software error. We find that the public signal about prices plays an important role in households' price expectations; the effect is stronger for better educated families, older people and men.

Keywords: Public Information, Price Expectations, Developing Countries, Natural Experiment, Heterogeneity

JEL Classification: O12, D10, D84

Suggested Citation

Carrillo, Paul E. and Emran, M. Shahe, Public Information and Household Expectations in Developing Countries: Evidence from a Natural Experiment (April 24, 2009). Available at SSRN: https://ssrn.com/abstract=1394500 or http://dx.doi.org/10.2139/ssrn.1394500

Paul E. Carrillo (Contact Author)

George Washington University - Department of Economics ( email )

Monroe Hall Suite 340
2115 G Street NW
Washington, DC 20052
United States

M. Shahe Emran

George Washington University - Department of Economics ( email )

2115 G Street NW
302 Monroe Hall
Washington, DC 20052
United States

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