Author: Alistair MacaulayPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
Heterogeneity in Imperfect Inflation Expectations
Author: Alistair MacaulayHeterogeneous Inflation Expectations, Learning and Market Outcomes
Author: Carlos MadeiraThe Hidden Heterogeneity of Inflation Expectations and Its Implications
Author: Lena DrägerPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Using a new consumer survey dataset, we document a new dimension of heterogeneity in inflation expectations that has implications for consumption and saving decisions as well as monetary policy transmission. We show that German households with the same inflation expectations differently assess whether the level of expected inflation and of nominal interest rates is appropriate or too high/too low. The 'hidden heterogeneity' in expectations stemming from these opinions is related to demographic characteristics and affects current and planned spending in addition to the Euler equation effect of the perceived real interest rate. Furthermore, these differences in opinions affect German households differently depending on whether they are renters or homeowners.
Heterogeneity in Inflation Expectations and Macroeconomic Stability Under Satisficing Learning
Author: Jaylson Jair da SilveiraPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Heterogeneity in Expectations, Official Information and Price-setting Behavior
Author: Gustavo Rojas-MatutePublisher:
ISBN:
Category : Business enterprises
Languages : en
Pages : 95
Book Description
How firms set their prices is of special importance in macroeconomics and, in particular, for monetary policy. This dissertation investigates price-setting behavior from two different perspectives and two different environments, from low inflation to hyperinflation.In Chapter 1, I point out that firms seem to pay more attention to GDP growth rates in economies with well-anchored inflation expectations than CPI inflation. I study how this heterogeneity affects price-setting behavior. I analyze three types of firms: those that only track GDP, those that only track CPI, and those that track both. The findings can be summarized as follows: (i) both GDP growth rate and CPI inflation expectations affect price-setting behavior but in opposite directions; (ii) the impact of long-run inflation expectations on price-setting behavior is more substantial than short-run expectations; (iii) in the presence of adjustment costs, the frequency of price changes of those firms that only track GDP growth rate is highly correlated with the series estimated by Nakamura et al., (2018) with data provided by the Bureau of Labor Statistics (BLS); (iv) in the short run, the output response to a monetary shock is larger while the price response is smaller in those firms that only track GDP growth rate than in those firms that only update CPI; (v) adjustment costs amplify monetary non-neutrality in only-GDP firms. If the aggregate effect is driven by ``only-GDP" firms, as suggested in (iii), the results are consistent with recent findings suggesting that the Phillips curve is flat (Del Negro et al., 2020, Hazell et al., 2020).In Chapter 2, I take advantage of a ``natural experiment" to study the impact of the lack of official information on price-setting behavior. In particular, I study a case between December 2015 and May 2019, when the Central Bank of Venezuela stopped releasing official economic statistics, including inflation rate, GDP, and balance of payments. Using a combination of data sets from the Billion Prices Project, I find that the lack of official information increases the size of price changes (intensive margin), leading the intensive margin to be the main driver of the variance of the inflation. The empirical results are confirmed with the calibration of a price-setting behavior model. The model suggests that the turning point occurred when the Central Bank started delaying the publications (2012-2014) before deciding to stop them entirely in 2015. These findings are groundbreaking because they occur in a context of hyperinflation where prices change very frequently and differ from the most recent literature that has shown that the extensive margin contributes the most during high inflation and hyperinflation (Alvarez et al., 2019, Gagnon, 2009). The evidence also suggests that, despite the surge of different non-official inflation indicators publicly available, firms rely on private sources.
Imperfect Information, Shock Heterogeneity, and Inflation Dynamics
Author: Tatsushi OkudaNBER Macroeconomics Annual 2003
Author: Mark GertlerPublisher: Mit Press
ISBN: 9780262072533
Category : Business & Economics
Languages : en
Pages : 432
Book Description
The NBER Macroeconomics Annual presents pioneering work in macroeconomics by leading academic researchers to an audience of public policymakers and the academic community. Each commissioned paper is followed by comments and discussion. This year's edition provides a mix of cutting-edge research and policy analysis on such topics as productivity and information technology, the increase in wealth inequality, behavioral economics, and inflation.
Inflation Expectations
Author: Peter J N SinclairPublisher: Routledge
ISBN: 1135179786
Category : Business & Economics
Languages : en
Pages : 273
Book Description
This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved, including the spread of inflation targeting and the large reduction in actual inflation that has been observed in most countries over the past decade or so.
Heterogeneity in Inflation Expectations and Personal Experience
Author: Cristina AngelicoPublisher:
ISBN:
Category :
Languages : en
Pages : 52
Book Description
Poor households report significantly higher inflation expectations than rich households. We assess, both theoretically and empirically, whether these differences are due to the recall of different shopping experiences and of information about aggregate inflation. Using data on shopping experiences, we show that the inflation expectations of each income group depend on the group's past grocery experiences as well as on past aggregate inflation. To explain this finding, we build a psychologically founded model in which consumers observe prices while shopping and listen to news about the general level of inflation, and - when predicting future inflation - they selectively recall the most frequent and salient memories. The model predicts that inflation expectations overweight frequent and salient memories, which leads to predictable errors in forecasting future inflation. We confirm these predictions in our data and show that our model accounts for the bulk of expectation differences across income groups.
Firm Heterogeneity in Macroeconomics
Author: Allen TranPublisher:
ISBN:
Category :
Languages : en
Pages : 141
Book Description
Macroeconomic models are often estimated with aggregate data, aligning the aggregated behavior of firms and households in models to the data. However, using aggregate data alone can overlook important details of firm behavior that are crucial for understanding issues in macroeconomics. In this dissertation, I use data on firms at the micro-level to more accurately capture firms behavior and their interactions with one another. This approach is applied to answer questions that relate to the monetary policy transmission mechanism, economic growth from new entrants and welfare gains from new technology. A substantial literature exists which suggests that imperfect information across firms is capable of generating large monetary non-neutralities. In Chapter One, the level of imperfect information is taken from micro-data and used to discipline a standard menu cost model augmented with information frictions. In the model, imperfect information has a negligible effect and real responses to a monetary shock are small and transient in contrast to the bulk of the imperfect information literature. The selection effect dominates the effects of imperfect information as the level of dispersion in inflation expectations in the data is tiny. This result still holds even when the level of dispersion is set to that of the maximal observed levels of dispersion. Chapter Two presents data that suggests new entering establishments compete for customers, rather than inputs in order to grow. Consistent with the data, I present a model where customers satisfice in forming relationships with establishments in the presence of search frictions. The extent of these search frictions is a new margin that affects selection and allocative efficiency. As search becomes less random and more directed, customers are less willing to satisfice, improving allocative efficiency and inducing exit of slower growing firms. When search frictions in product markets are increased to match establishment dynamics in Chile, output falls by roughly 14 per cent relative to the model calibrated to the US, reflecting decreased allocative efficiency. Chapter Three studies the impact of online retail on aggregate welfare. I develop a new measure of store level retail productivity and with a spatial model, calculate each store's equilibrium response to increased competitive pressure from online retailers. From counterfactual exercises mimicking improvements in shipping and increased internet access, I estimate that improvements in online retail increased aggregate welfare from retail activities by 13.4 per cent. Roughly two-thirds of the increase can be attributed to welfare improvements holding fixed market shares, with the remainder due to reallocation. Surprisingly, 8.2 percent of firms actually benefit as they absorb market share from closed stores. Finally, I estimate that the proposed Marketplace Fairness Act would claw back roughly one-third of sales that would otherwise have gone to online retailers between 2007-12.