European Journal of Economic and Business (ISSN - 2456-3900)

Latent Class Analysis for Reliable Measure of Inflation Expectation in the Indian Public

Sunil Kumar

Abstract


The main aim of this article is to inspect the properties of survey based on household inflation expectations, conducted by
Reserve Bank of India (RBI). It is theorised that the respondent’s answers are exaggerated by extreme response bias. Latent
class analysis has been hailed as a promising technique for studying measurement errors in surveys, because the model
produces estimates of the error rates associated with a given question of the questionnaire. I have identified a model with
optimum performance and hence categorize the objective as well as reliable classifiers or otherwise.

Keywords


inflation expectation, latent class analysis, measurement error, classification

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References


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