Consumer Forecast Revisions: Is Information Really so Sticky?

10 Pages Posted: 15 Sep 2017

See all articles by Carola Binder

Carola Binder

Haverford College - Department of Economics

Date Written: September 13, 2017

Abstract

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

Binder, Carola, Consumer Forecast Revisions: Is Information Really so Sticky? (September 13, 2017). Economics Letters, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3036559

Carola Binder (Contact Author)

Haverford College - Department of Economics ( email )

Haverford, PA 19041
United States

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