NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The formation of inflation expectations: an empirical analysis for the UK

David G. Blanchflower, Conall MacCoille

NBER Working Paper No. 15388
Issued in September 2009
NBER Program(s):   ME

This paper uses micro-data from three surveys for the UK to consider how individuals form inflation expectations. Generally, we find significant non-response bias in all surveys, with non-respondents especially likely to be young, female, less educated and with lower incomes. A number of demographic generalizations can be made based on the surveys. Inflation expectations rise with age, but the more highly educated and home owners tend to have lower inflation expectations. These groups are also more likely to be accurate in their estimates of official inflation twelve months ahead, and have less backward-looking expectations.

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Document Object Identifier (DOI): 10.3386/w15388

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