to prospective inflation. Each measure has advantages and drawbacks.

# 2.1. Survey-based measures

Surveys of households and firms . Among advanced economies, commonly referenced surveys of households’ inflation expectations include the University of Michigan’s Surveys of Consumers (monthly frequency for the United States), the European Commission’s consumer survey for the countries of the European Union (monthly), and the Bank of England’s consumer survey (quarterly) for the United Kingdom.<sup>2</sup> High-frequency surveys of households’ or firms’ inflation expectations are also conducted by Australia, Canada, the Czech Republic, Italy, Japan, the Republic of Korea, New Zealand, and Sweden. Among EMDEs, survey-based measures of households’ or firms’ expectations are produced by central banks in East Asia (for example, Indonesia, the Philippines, and Thailand), Europe and Central Asia (for example, Kazakhstan and Turkey), and India and South Africa.<sup>3</sup> Surveys of professional forecasters. The most commonly used survey of professional forecasters is produced by Consensus Economics, which incorporates the views of more than 700 professional forecasters in 85 advanced economies and EMDEs. Consensus Economics publishes short-term expectations at a monthly frequency and long-term expectations at a semi-annual or quarterly frequency.<sup>4</sup> Other surveys of professional forecasters include the Survey of Professional Forecasters by the Federal Reserve Bank of Philadelphia, which provides data on expectations up to 10 years ahead, and the European Central Bank’s Survey of Professional Forecasters. Central banks in several other economies (for example, Argentina, Brazil, Iceland, Indonesia, Israel, Mexico, South Africa, and Turkey) also produce professional survey-based measures of inflation expectations. Surveys of inflation expectations in EMDEs typically have smaller samples than those in advanced economies, but the number of EMDEs included in Consensus Economics’ surveys has increased over time, from seven in 1990 to 52 in 2018.<sup>5</sup> Differences between surveys of households or firms and surveys of professional forecasters . On average, households’ and firms’ inflation expectations are higher than professional forecasters’ expectations in advanced economies and EMDEs (Figure 1). The volatility of households’ inflation expectations is also larger than that of professional forecasters’ expectations. Households’ beliefs about past inflation are found to be a strong predictor of their inflation expectations (Jonung 1981; Malmendier and Nagel 2016). Households’ inflation expectations are thus more backward looking than professional forecasters’ expectations.<sup>6</sup>

> 2 Most survey results are presented as median responses. Discrepancies among respondents can be informative as a proxy of inflation uncertainty (Mankiw, Reis, and Wolfers 2003; Miles et al. 2017).

> 3 For the European Union, a data set on inflation expectations has been collected by the European Commission since 2003. Although it has been used for research purposes, it has not yet been published (Arioli et al. 2017). Some central banks (for example, those of China, Poland, and Romania) release survey results showing the percentage of respondents who expect inflation to change.

> 4 In addition, Germany’s Ifo Institute has provided data on five-year-ahead inflation expectations for more than 70 countries since the end of 2014.

> 5 The International Monetary Fund’s World Economic Outlook has the broadest country coverage of longterm inflation projections (39 advanced economies and 154 EMDEs).

> 6 Kumar et al. (2015) and Kabundi, Schaling, and Some (2015) document that in New Zealand and South Africa, some firms do not understand the central bank’s objective function. Hence, even if professional forecasters’ expectations are well anchored by inflation targeting in these countries, the same is not

4