Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • July 2017
  • Article
  • American Economic Journal: Macroeconomics

Inflation Expectations, Learning, and Supermarket Prices: Evidence from Survey Experiments

By: Alberto Cavallo, Guillermo Cruces and Ricardo Perez-Truglia
  • Format:Print
ShareBar

Abstract

Information frictions play a central role in the formation of household inflation expectations, but there is no consensus about their origins. We address this question with novel evidence from survey experiments. We document two main findings. First, individuals in lower-inflation contexts have significantly weaker priors about the inflation rate. This finding suggests that rational inattention may be an important source of information frictions. Second, cognitive limitations also appear to be a source of information frictions: even when information about inflation statistics is made readily available, individuals still place a significant weight on less accurate sources of information, such as their memories of the price changes of the supermarket products they purchase. We discuss the implications of these findings for macroeconomic models and policy-making.

Keywords

Inflation Expectations; Survey Experiment; Rational Inattention; Supermarkets; Macroeconomics; Household; Inflation and Deflation; Policy

Citation

Cavallo, Alberto, Guillermo Cruces, and Ricardo Perez-Truglia. "Inflation Expectations, Learning, and Supermarket Prices: Evidence from Survey Experiments." American Economic Journal: Macroeconomics 9, no. 3 (July 2017): 1–35.

Supplemental Information

Survey Questionnaire
Appendix
  • Find it at Harvard
  • Read Now

About The Author

Alberto F. Cavallo

Business, Government and the International Economy
→More Publications

More from the Authors

    • March, 2021
    • American Economic Review: Insights

    Tariff Passthrough at the Border and at the Store: Evidence from U.S. Trade Policy

    By: Alberto Cavallo, Gita Gopinath, Brent Neiman and Jenny Tang
    • March 2021
    • Review of Economics and Statistics

    Targeted Price Controls on Supermarket Products

    By: Alberto Cavallo and Diego Aparicio
    • February 2021
    • Faculty Research

    The Coronavirus (COVID-19) Pandemic and the Global Economy (B)

    By: Alberto Cavallo and Christian Godwin
More from the Authors
  • Tariff Passthrough at the Border and at the Store: Evidence from U.S. Trade Policy By: Alberto Cavallo, Gita Gopinath, Brent Neiman and Jenny Tang
  • Targeted Price Controls on Supermarket Products By: Alberto Cavallo and Diego Aparicio
  • The Coronavirus (COVID-19) Pandemic and the Global Economy (B) By: Alberto Cavallo and Christian Godwin
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College