How informative are quantified survey data? evidence from RBI household inflation expectations survey

Abstract

Quantification of the ordinal survey responses on inflation expectations ease and important preliminary step for undertaking further macroeconomic analysis of the data. In this paper, we briefly describe the standard quantification methods along with the underlying assumptions. We also propose two new methods for Quantification. We than apply these methods to quantify the IESH data collected by the Reserve Bank of India (RBI). An interesting fact that emerges from this exercise is simpler quantification methods are found to perform better that more complex methods for IESH data. Also, the methods with time varying weights or time varying thresholds, as the case may be, work significantly better.