Consumer Forecast Revisions: Is Information Really so Sticky?
10 Pages Posted: 15 Sep 2017
Date Written: September 13, 2017
Previous studies using consumer survey data on inflation expectations find that consumers revise their inflation forecasts approximately once every eight months, suggesting that information is quite "sticky." However, in the consumer survey data analyzed, respondents take the survey twice with a six-month gap, and responses are reported to the nearest integer. Both the low frequency and the rounding result in overestimation of information stickiness. Higher-frequency unrounded data reveals that consumers revise their inflation expectations far more frequently---about five times in an eight month period.
Keywords: Inflation expectations, information rigidities, sticky information, consumer surveys
JEL Classification: E31, D83, D84
Suggested Citation: Suggested Citation