Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80854
Authors: 
Dräger, Lena
Lamla, Michael J.
Year of Publication: 
2013
Series/Report no.: 
KOF Working Papers, KOF Swiss Economic Institute, ETH Zurich 329
Abstract: 
We investigate the updating behavior of individual consumers regarding their short and long-run inflation expectations. Utilizing the University of Michigan Survey of Consumer's rotating panel microstructure, we can identify whether individuals adjust their inflation expectations over a period of six months. We find evidence that the updating frequency has been underestimated. Furthermore, looking at the possible determinants of an update we find support for imperfect information models. Moreover, individual expectations are found to be more accurate after an update and forecast accuracy is affected by inflation volatility measures and news regarding inflation. Finally, the updating frequency is found to significantly move spreads in bond markets.
Subjects: 
rational Inattention, updating inflation expectations
microdata
news
JEL: 
D84
E31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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