Financial literacy impact on the inflation expectations’ uncertainty
Ilya Gurov, Daria Elitsur, Evgeny Inozemtsev, Vasily Zuev, Julia Krotova, Denis Mamontov, Elena Ostrovskaya, Henry Penikas, Mikhail Belov
Inflation expectations (IE) is the indicator of by how many percentage points the respondents on average expect the changes in prices for the prospective period in time. In other words, IE is the average of average expectations by respondents. However, a person may expect several values to take place. Then we may derive a measure of dispersion per person and an average of dispersion measures is the inflation expectations uncertainty (IEU).
Bank of Russia regularly monitores IEU using internal surveys of its
employees by controlling for the financial literacy of the respondents. In
The paper novelty is the first study of the IEU dynamics in Russia using expert surveys. Given comparability to the all-Russian survey output per one date, we are confident in our findings. In particular, we notice gradular rise in IEU since end 2023 to mid 2024. We claim that IE is a process with a longer memory, than IEU.
When considering the subset of respondents with high financial literacy, we do not trace particular effect of the latter on the IE/IEU, specifically when controlling for the degree of how confident a person is in his responses. If we discard the latter control, the more financially literate tend to have lower IE and lower IEU.