---
title: Sticky Expectations and Consumption Dynamics
author: 
- name: Christopher D Carroll
  affiliation: Department of Economics, Johns Hopkins University
  email: ccarroll@jhu.edu
- name: Edmund Crawley
  affiliation: Department of Economics, Johns Hopkins University
  email: ecrawle2@jhu.edu}{\texttt{ecrawle2@jhu.edu
- name: Jiri Slacalek
  affiliation: DG Research, European Central Bank
  url: http://www.slacalek.com/
  email: jiri.slacalek@ecb.europa.eu
- name: Kiichi Tokuoka
  affiliation: Ministry of Finance, Japan
  email: kiichi.tokuoka@mof.go.jp
- name: Matthew N White
  affiliation: Department of Economics, University of Delaware
  email: mnwecon@udel.edu
date: February 19, 2018
abstract: Macroeconomic models often invoke consumption 'habits' to explain the substantial persistence of aggregate consumption growth, but a large literature has found essentially no evidence of habits in micro data.  We show that the apparent conflict can be explained using a model in which consumers have accurate knowledge of their personal circumstances but 'sticky expectations' about the macroeconomy. Aggregate consumption growth exhibits persistence generated by consumers' imperfect attention to aggregate shocks, even though at the individual level consumption growth appears to be serially uncorrelated (because it is dominated by idiosyncratic shocks). In contrast with models in the existing literature, our model is consistent with _both_ micro _and_ macro stylized facts about consumption dynamics.
tags: [Consumption, Sticky Expectations, Habits, Inattention, Imperfect Information]
doi: 

---


