Please use this identifier to cite or link to this item: http://hdl.handle.net/11718/25468
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dc.contributor.authorSingh, Gaurav Kumar-
dc.date.accessioned2022-03-01T07:08:53Z-
dc.date.available2022-03-01T07:08:53Z-
dc.date.issued2020-12-02-
dc.identifier.citationSingh, G. K. (2020). Expectations formation of household inflation expectations in India. IIM Ahmedabad.en_US
dc.identifier.urihttp://hdl.handle.net/11718/25468-
dc.description.abstractInflation expectations data are commonly used to address a number of important questions primarily related to the inflation expectations formation. This work presents such an empirical analysis of Reserve Bank of India’s (RBI) inflation expectations data for Indian urban population. First, we apply a battery of tests for verifying the assumptions of rationality of household expectations. The tests lead to the outright rejection of the assumptions. On the other hand, the inflation forecasts by professional forecasters seem to support the rational expectations assumptions. Second, considering a regression model we find that the inflation forecasts by the professionals forecast the actual inflation better than what could be predicted by the recently available actual inflation data. Finally, using a sticky information model (Mankiw Reis (2001, 2002), Carroll (2003)) we also find the support for Carroll’s contention that relevant macroeconomic information about future inflation flows from experts to the households, not vice versa. Additionally, if the sticky inflation model describes the household inflation expectations formation, it is natural to expect that more news about inflation in the news channels would lead to the reduction of disagreement. Our empirical analysis using Google trend data supports this hypothesis.en_US
dc.language.isoenen_US
dc.publisherIndian Institute of Management Ahmedabaden_US
dc.subjectExpectation formationen_US
dc.subjectSticky informationen_US
dc.subjectNews dataen_US
dc.titleExpectations formation of household inflation expectations in Indiaen_US
dc.typeWorking Paperen_US
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