Heterogeneous Inflation Expectations and Learning

Carlos Madeira, Basit Zafar

Research output: Contribution to journalArticlepeer-review

34 Scopus citations


Using the panel component of the Michigan Survey of Consumers, we estimate a learning model of inflation expectations, allowing for heterogeneous use of private information and lifetime inflation experience. Life experience inflation has a significant impact on individual expectations, but only for 1-year-ahead inflation. Public information is substantially more relevant for longer horizon expectations. Even controlling for life experience inflation and public information, idiosyncratic information explains a nontrivial proportion of the inflation forecasts of agents. Women, ethnic minorities, and less educated agents have a higher degree of heterogeneity in their idiosyncratic information, and give less importance to recent movements in inflation.

Original languageEnglish (US)
Pages (from-to)867-896
Number of pages30
JournalJournal of Money, Credit and Banking
Issue number5
StatePublished - Aug 1 2015
Externally publishedYes


  • Heterogeneous expectations
  • Imperfect information
  • Inflation expectations
  • Learning
  • Sticky information

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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