Centre for Development Economics
Department of Economics
Delhi School of Economics
ANNOUNCE A SEMINAR
by
Areendam Chanda
(Louisiana State University)
(Thursday, January 30, 2025, at 2:15 PM IST )
Venue: Amex Room
Abstract:-
Expectations play a central role in inter-temporal models in macroeconomics. In this paper, we exploit granular data from India to examine the nature of expectation formation, biases, and effects and shocks on household consumption. We document that households in India tend to be relatively more optimistic about future conditions; there is significant heterogeneity, with urban and high-income households being more so. However, when looking at forecast errors, we show that they may be “under-optimistic”. The research also documents significant heterogeneity in the effects of optimistic vs pessimistic households. Lastly, we show that expectation shocks affect consumption above and beyond income shocks.