00000nam 2200000zi 4500 9.894221 CaOODSP 20221107173656 m o d f cr mn||||||||| 201202t20202020onca ob f000 0 eng d CaOODSP eng rda CaOODSP n-cn--- n-us--- y1y1 FB3-5/2020-52E-PDF Bellemare, Charles, author. The determinants of consumers' inflation expectations : evidence from the US and Canada / by Charles Bellemare, Rolande Kpekou Tossou and Kevin Moran. Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2020. ©2020 1 online resource (36 pages) : illustrations (some colour). text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2020-52 "Last updated: November 30, 2020." Includes bibliographical references (pages 31-32). "We propose and estimate a dynamic and individual model of expectations formation that links individual consumers' inflation expectations to their own lagged forecasts as well as proxies for the rational expectation forecasts. The model builds on the existing rational inattention literature and extends it in several dimensions. We explicitly model the expectations updating rule which consumers use to incorporate new information in their experience and take seriously heterogeneity in inflation expectations extensively documented in the literature. We estimate the model using data from two important new surveys — the Federal Reserve Bank of New York's Survey of Consumer Expectations and the Bank of Canada's Canadian Survey of Consumer Expectations. We find that inflation expectations appear to correlate more strongly to measures of rational expectations forecasts in Canada than in the US, and conversely less to lagged expectations. More specifically, the median respondent assigns overall weights of roughly 75% to proxies for the rational expectation forecasts and 25% to lagged expectations in Canada, while these weights are around 50-50 for the US. We show that these differences in weights are not explained by differences in the characteristics of their stand-in consumers. Given this finding, one candidate explanation could be related to the explicit inflation target in Canada in comparison to the dual mandate in the US"--Abstract, page ii. Inflation (Finance) Canada Econometric models. Inflation (Finance) United States Econometric models. Rational expectations (Economic theory) Canada Econometric models. Rational expectations (Economic theory) United States Econometric models. Inflation Canada Modèles économétriques. Inflation États-Unis Modèles économétriques. Anticipations rationnelles (Théorie économique) Canada Modèles économétriques. Anticipations rationnelles (Théorie économique) États-Unis Modèles économétriques. Bank of Canada, issuing body. Staff working paper (Bank of Canada) 2020-52. (CaOODSP)9.806221 PDF 593 KB https://publications.gc.ca/collections/collection_2020/banque-bank-canada/FB3-5-2020-52-eng.pdf