Inflation Literacy, Inflation Expectations, and Trust in the Central Bank: A Survey Experiment

Speaker: Dr Giang Nghiem
Affiliation: Leibniz University Hannover
Location: School of Economics Boardroom, Colin Clark Building (#39), UQ St Lucia campus

Abstract 

This paper studies the causal effect of inflation literacy on inflation expectations using a randomized control trial (RCT) on a representative sample of the German population. We find that general and non-numerical information about inflation and monetary policy improves respondents' inflation literacy. It also causes a higher likelihood that respondents provide inflation predictions, but does not affect the quantitative levels of the predictions. In the second step, respondents are randomly provided with different quantitative information treatments about inflation. Those who received the literacy treatment react more strongly to some quantitative treatments regarding their reported forecast uncertainty and trust in the central bank. This suggests that general knowledge about inflation and monetary policy is relevant for inflation expectations via indirect factors such as uncertainty and trust.

About the presenter's meeting 

If you would like to meet with Dr Nghiem, please contact: Dr Jamie Cross.