Professor Ricardo Nunes, University of Surrey
"House Price Expectations and Inflation Expectations: Evidence from Survey Data"
Thursday, 15 May 2025. 15:00-16:30
Room 141A, Adam Smith Business School
Abstract
We find that households tend to overweight house price expectations when forming their inflation expectations. The finding is robust across several specifications and two survey data sets for the United States. We also find that there is a significant effect of the cognitive abilities of households as more sophisticated households don’t overweight house price inflation as much. We model this household behaviour in a two-sector New Keynesian model with an overweighted and a non-overweighted sector and analytically derive a welfare loss function consistent with the micro-foundations of the model. In this setup, we show that to gauge the correct interest rate response, the central bank needs to be aware that some sectors are overweighted and that movements in expected inflation in such sectors are important for monetary policy.
Bio
Ricardo Nunes is a Professor of Economics at the University of Surrey. His main research is on monetary and fiscal policy. He has published in leading academic journals, including the Quarterly Journal of Economics, Journal of Political Economy, American Economic Review: Insights, Journal of Monetary Economics, Journal of Economic Theory, and the Journal of the European Economic Association, among others.
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First published: 18 March 2025
