Disagreement in Consumer Inflation Expectations

We posit that consumers form expectations about inflation by combining two sources of information: their beliefs from shopping experience and news they learn experts. Disagreement among in our model comes four sources: (i) consumers’ divergent prior beliefs, (ii) heterogeneity propensities to experts, (iii) experts’ different views future inflation, (iv) difference mean between By carefully matching the datasets Michigan Survey Consumers with Professional Forecasters, we find households experts differ substantially persistently each other, pay close attention salient price changes, while respond more monetary policy macro indicators. Our empirical estimates imply economically significant degrees information rigidity these vary across households. This poses a great challenge for canonical sticky-information assumes single rate acquisition noisy-information which all agents place same weight on new received.