Upgrading and inflation expectations in Singapore: A survey experiment

Inflation expectations of households are crucial for the analysis of business cycles and formulation of monetary policy. The central questions are how expectations are formed, their magnitude, and whether they are adaptive or sensitive to policy changes. To obtain a better understanding of the pass-through of inflation expectations to wage and price setting, it is essential to address the first question on the formation of inflation expectations. However, there is no consensus in the empirical literature on how households ’inflation expectations are formed (Bernanke,2007; Bachmann et al., 2015 and Coibion et al.,2018).