Raphael Schoenle (Brandeis University) – Greater Than the Sum of the Parts: Aggregate vs. Aggregated Inflation Expectations

OeNB Friday Seminar

Greater Than the Sum of the Parts: Aggregate vs. Aggregated Inflation Expectations

With Raphael Schoenle, Brandeis University

Using novel survey evidence on consumer inflation expectations disaggregated by personal consumption expenditure (PCE) categories, we document the paradox that consumers' aggregate inflation expectations usually exceed and are more volatile than any category expectation. We explore procedures for aggregating category inflation expectations, and find that the inconsistency between aggregate and aggregated inflation expectations rises with subjective uncertainty and systematically relates to socio-economic characteristics. Overall, our results are inconsistent with the notion that consumers' aggregate inflation expectations comprise an expenditure-weighted sum of category beliefs. Moreover, aggregated inflation expectations explain a greater share of planned consumer spending than aggregate inflation expectations.

Date
Friday, 3 June 2022 | Start: 04:00 PM | End: 05:30 PM          

Venue
The event is planned online via Webex

Registration
Please contact the Event Management by 1 June 2022, at the latest to receive a personal invitation.