Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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Determinants of Inflation Expectations of South Korean Consumers

한국 소비자의 기대 인플레이션 결정요인

  • Young-Bin Ahn (Department of International Trade, Pusan National University)
  • Received : 2023.07.19
  • Accepted : 2023.10.31
  • Published : 2023.12.31
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Abstract

Purpose - The purpose of this study is to investigate the determinants of consumers' inflation expectations using consumers' inflation perceptions and the sub-components of consumer price index (CPI) basket in South Korea based on a consumer survey conducted by the Bank of Korea (BOK). Design/methodology/approach - Using Carroll's (2003) epidemiological model, we analyzed data from January 2013 to January 2023, resulting in a data set of 121 observations for both inflation perceptions and inflation expectations. This study focuses only on aggregate inflation expectations and perceptions because of data availability from the BOK. Findings - Professionals' forecasts play a major role in forming consumers' inflation expectations, whereas the actual headline CPI and consumers' inflation perceptions do not. These results remain robust when including the sub-components of the CPI basket in the analysis. Research implications or Originality - It would be the most efficient way to suppress professionals' expected inflation in fighting against a substantial spike in consumers' inflation expectations. To guide consumers' inflation expectations based on BOK's inflation targeting, the bank needs to consider professionals' forecasts in devising monetary policies.

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Acknowledgement

이 논문은 부산대학교 신진교수 지원사업에 의하여 연구되었음.

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