The Bank of Russia and the magazine "Money and Credit" («Деньги и кредит») have summed up the results of the 2025 Competition of Undergraduate and Graduate Student Economic Research. Among the winners is Dmitry Novikov, a PhD student of the program "Economic Theory". His work "Inflationary Expectations of Consumers in Russia and the USA: the Hypothesis of Diagnostic Expectations" took third place in the competition. Professor Yulia Vymyatnina served as the academic supervisor.
"Money and Credit" is the oldest banking publication in Russia (published since 1927). Since 2018 it has focused on academic works using economic and mathematical methods. The Bank of Russia competition supports young researchers whose work can contribute to the development of economic science.
Dmitry's work is devoted to the empirical testing of the theory of diagnostic expectations using data on consumer inflation expectations in Russia and the USA. His work also explores whether the "diagnosticity" of expectations depends on macroeconomic parameters.
Diagnostic expectations theory is one of the theories that explains why real people's expectations about economic indicators do not correspond to what the rational expectations theory, formulated in the early 1960s, says. Diagnostic expectations theory was formulated relatively recently, in 2018, but it relies on the representativeness heuristic described by D. Kahneman and A. Tversky in the 1970s.
The study showed that the theory of diagnostic expectations can be used to describe Russian and American data on consumer inflation expectations, and the "diagnostic" nature of expectations is relatively stable over time and does not depend on macroeconomic parameters. This means that in response to receiving information on the effect of pro-inflationary factors, people's inflation expectations, for example, for one year in the future, grow more strongly than the inflation rate will be in one year, and this feature of expectations is relatively stable over time.
We congratulate Dmitry Novikov and Yulia Vymyatnina and wish them further success in their scholarly endeavors!
In the photo, Dmitry Novikov is first on the left, Yulia Vymyatnina is in the center.