Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
Article information
Title: Households survey and inflation expectation
Issue: Vol. 13, No 2, 2020
Published date: 06-2020 (print) / 06-2020 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Jeyhun Abbasov
Central Bank of Azerbaijan, Azerbaijan State University of Economics

Khagani Karimov
Central Bank of Azerbaijan
Keywords: inflation expectation, household surveys, indifference intervals, forecasting error, unbiasedness of expectations, efficiency of expectations
DOI: 10.14254/2071-789X.2020/13-2/14
Index PUBMS: 6312fc59-bef8-11ea-9cc3-fa163e0fa1a0
Language: English
Pages: 210-227 (18)
JEL classification: C01, C15, C83, D12

Central Bank of Azerbaijan intends to move to the Inflation Targeting regime in the medium term. The new regime requires the development of new models and methodologies. Though the Bank’s researchers have already developed different advanced models, most of them use the quantitative factor analysis of inflation. The current paper investigates an alternative approach that allows the estimation of inflation expectations by using the survey data. This approach, which has never been used before in Azerbaijan, helps to understand the behavior of the households in detail and enables converting qualitative data into quantitative data. Assuming that households’ responses have normal and uniform probability distributions, the inflation expectations were estimated for the period of 2013Q3-2020Q1 in Azerbaijan.


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