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Home | Events | Learning, Heuristics and Anchored Inflation: How do Different Types of Consumers Change Their Minds about Inflation?
Seminar

Learning, Heuristics and Anchored Inflation: How do Different Types of Consumers Change Their Minds about Inflation?

  • Location
    Erasmus University Rotterdam, Campus Woudestein, ET-14
    Rotterdam
  • Date and time

    November 05, 2026
    12:00 - 13:00

Abstract

Bivariate VAR models of actual and expected inflation are estimated using alternative estimation methods to investigate how, in real time and as information arrives, different types of consumers learn about inflation. The estimated models distinguish various views about learning including those based on Bayesian updating or on heuristics. Using a detailed Australian survey, we find that learning is best characterised by periodic shifts in beliefs rather than incremental adjustments, that different consumer groups learn at different times and from different experiences, and that their long-run inflation expectations occasionally become unanchored and take a range of values which are inter-connected but do not move in sync. Joint paper with Viet Nguyen and Kalvinder Shields.