Review of the recent literature on subjective inflation expectations of households, why some of those puzzling features such as a general upward bias, higher inflation expectations of women as compared to men, or large cross-sectional dispersion, all puzzling from the perspective of full information rational expectations models, naturally arise based on the signals consumers use in their local economic environments, and how these expectations shape households' consumption, savings, and investment choices. Largely based on joint work with Olivier Coibion, Francesco D'Acunto, Yuriy Gorodnichenko, Daniel Hoang, Maritta Paloviita, Andreas Fuster, Fabio Braggion, Felix von Meyerinck, Philip Schnorpfeil, Benjamin Born, Dimitris Georgarakos, Raphael Schoenle, Kristian Myrseth, Alexander Dietrich, Robert Rich as well as many other important contributions.
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A review of literature— making sense of puzzling features of households' inflation expectations based on the information households acquire in local economic environments, from Francesco D’Acunto and Michael Weber https://lnkd.in/ehq9t5s8
