Public Information and Inflation Expectations: Microeconometric Evidence from a Natural Experiment
The Review of Economics and Statistics
2012
Governments provide public information to reduce information imperfections. Do households rely on public signals to inform themselves about market conditions? To identify the importance of public information in households' price expectations, we take advantage of a unique natural experiment in Ecuador where the published inflation rate had been different from the correct rate over a period of fourteen months due to a software error. We find that the public signal about prices plays an important role in households' price expectations, and the change in price expectations affects their savings choices. The effect is stronger for better-educated and older people.
- DOI
- 10.1162/rest_a_00213
- Volume
- 94 (4)
- Pages
- 860-877
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref