Heterogeneity of Inflation Expectations: An Analysis Using IESH Data

Abstract

The authors model heterogeneity of inflation expectations across Indian households using the Inflation Expectations Survey of Households data set. Using Carroll-type epidemiological models and pooled cross sectional analyses, the authors find that women, homemakers, older people and Tier 2 and 3 city dwellers tend to have higher inflation expectations compared to their counterparts. In the epidemiological model-based analysis, these very cohorts display higher speed of adjustment to news. Overall higher relative adjustment speeds point to the significance of central bank communications.

Citation

Goyal, A. and Parab, P. (2021), "Heterogeneity of Inflation Expectations: An Analysis Using IESH Data", Barnett, W.A. and Sergi, B.S. (Ed.) Recent Developments in Asian Economics International Symposia in Economic Theory and Econometrics (International Symposia in Economic Theory and Econometrics, Vol. 28), Emerald Publishing Limited, Leeds, pp. 423-437. https://doi.org/10.1108/S1571-038620210000028024