Financial literacy and inflation expectation: modeling based using the pseudo-panel data on Russia
Karen Tumanyants, Fydor Kuleshov, Henry Penikas, Vasiliy Zuev
Many academic studies uncover systemic differences in the inflation expectations for heterogenous groups of population. Financial literacy might be one of determinants for such differences, in Russia also (Andreev et al., 2024). Our study confirms this fact by expanding the data window from one year used in (Andreev et al., 2024) to three years. Moreover, we find that more financially literate respondents have lower inflation expectations.
For the purpose of our research, we consolidate data from the two sources – inflation expectations survey and consumer (household) finance – by creating pseudo-panels. We study answers to both quantitative and qualitative questions. We also control for the major social and demographic factors.
We claim that there is statistically significant, but non-linear association
between the inflation expectations and financial literacy. Our finding holds for
the inflation expectations at various horizons: for the short-term ones (for one
month ahead), for the
We find that the future inflation expectations are related to the financial literacy of the respondent via the channel of the observed (perceived) inflation. More financially literate respondents evaluate current inflation as being lower than the levels perceived by their less literate colleagues. Same time their future inflation forecasts are associated with the current inflation values perceived by them. More financially literate respondents present the current inflation numbers which are much closer to that computed by Rosstat, that the other respondents do.