Inflation Expectations Heterogeneity And Its Coordination Game Analysis

The development of the expectations theory makes people realize the importance of expectations, so more and more scholars committed to applying the expectations theory to every field, trying to explain various economic phenomena and economic activities more accurately and comprehensively. One of the most prominent is the study of inflation expectations.Based on previous research on inflation expectations, the author did a series of arrangement and analysis, and the empirical analysis shows that the inflation expectations of residents in China is neither completely rational nor completely adaptive, residents can learn and adjust to fix their expectations quickly. At the same time, inflation expectations and the actual inflation have close relationship: the actual inflation is one reason for the formation of inflation expectations, while inflation expectations have a role on promoting the actual inflation. Then, we measured the difference expectations between the residents and the central bank,and analyzed the game relationship of them: The dualism of the monetary policy objectives and the dynamic inconsistency of monetary policy make the central bank trying to make unexpected inflation for economic growth, while residents try to influence the policies of the central bank by adjusting their expectations.In this paper, we used coordination game theory and model to analysis the game behavior between residents and the central bank. According to the result of our final analysis, this kind of repeated game behavior is likely to lead a meaningless high inflation. We finally analysis the existence of the optimal equilibrium solution based on the objective function and find the factors that affect the overall social utility through the coordination model. At last, to achieve the goal of guiding residents’ rational expectation,controlling inflation and maximizing social welfare,we designed a series of coordination mechanism.