Peer Influence and Inflation Expectations: Evidence from Households' Social Comparisons

Description

The study uses an ad hoc primary survey along with data from the Consumer Confidence Survey (CCS) conducted by the Reserve Bank of India. It aims to understand how social comparison and peer influence affect the inflation expectations of households. Households seek to maintain a certain relative social position and aspire to be better than their peers. When they are unable to do so, they often attribute it to external factors such as rising prices, which in turn leads to higher inflation expectations.

Institutions

• Indira Gandhi Institute of Development Research

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