Global inflation dynamics in the post-crisis period: What explains the puzzles?

Friedrich, Christian

doi:10.1016/j.econlet.2016.02.032

Cited by 40 publications

(23 citation statements)

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“…Recognizing this importance, central banks have in recent decades devoted considerable e¤ort to anchoring in ‡ation expectations, for instance, by announcing in ‡ation targets. Consumer in ‡ation expectations have also been central in explaining the evolution of in ‡ation in the aftermath of the …nancial crisis, …rst during the period of the "missing disin ‡ation" (during which in ‡ation was higher than would have been expected based on models with standard determinants like the magnitude of the output gap and in ‡ation expectations of professional forecasters) and subsequently, when in ‡ation was weaker than expected (Coibion and Gorodnichenko, 2015;Friedrich, 2014). However, while a substantial body of empirical research has extensively studied professional forecasters' in ‡ation expectations (among many others, see Capistran and Timmermann, 2009;Coibion and Gorodnichenko, 2010), much less is known about expectations by the households.…”

Section: Introductionmentioning

confidence: 99%

Consumers' Attitudes and Their Inflation Expectations

Ehrmann

Pfajfar

Santoro

2015

FEDS

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This paper studies consumers'in ‡ation expectations using micro-level data from the Surveys of Consumers conducted by University of Michigan. It shows that beyond the well-established socio-economic factors such as income, age or gender, other characteristics such as the households'…nancial situation and their purchasing attitudes are important determinants of their forecast accuracy. Respondents with current or expected …nancial di¢ culties, pessimistic attitudes about major purchases, or expectations that income will go down in the future have a stronger upward bias in their expectations than other households. However, their bias shrinks by more than that of the average household in response to increasing media reporting about in ‡ation. Equivalent results are found during recessions.JEL classi…cation: C53, D84, E31

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Section: Introductionmentioning

confidence: 99%

Consumers' Attitudes and Their Inflation Expectations

Ehrmann

Pfajfar

Santoro

2015

FEDS

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“…Recognizing this importance, central banks have in recent decades devoted considerable effort to anchoring inflation expectations-for instance, by announcing inflation targets. Consumer inflation expectations have also been central in explaining the evolution of inflation in the aftermath of the financial crisis, first during the period of the "missing disinflation" (during which inflation was higher than would have been expected based on models with standard determinants like the magnitude of the output gap and inflation expectations of professional forecasters) and subsequently when inflation was weaker than expected (Friedrich 2014;Coibion and Gorodnichenko 2015). However, while a substantial body of empirical research has extensively studied professional forecasters' inflation expectations (among many others, see Capistran and Timmermann 2009;Coibion and Gorodnichenko 2010), much less is known about expectations by consumers.…”

Section: Introductionmentioning

confidence: 99%

Consumers' Attitudes and Their Inflation Expectations

Ehrmann

Pfajfar²,

Santoro

2015

SSRN Journal

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This paper studies consumers' inflation expectations using micro-level data from the University of Michigan's Surveys of Consumers. It shows that beyond the well-established socioeconomic factors such as income, age, or gender, inflation expectations are also related to respondents' financial situation, their purchasing attitudes, and their expectations about the macroeconomy. Respondents with current or expected financial difficulties and those with pessimistic attitudes about major purchases, income developments, or unemployment have a stronger upward bias than other households. However, their bias shrinks by more than that of the average household in response to increasing media reporting about inflation.

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“…Due to data availability problems consumer inflation expectations have been used to proxy firms' expectations 2 (e.g. Coibion and Gorodnichenko, 2015;Friedrich, 2014), but consumer expectations are obviously important also themselves, for understanding decisions related to consumption, saving and wage bargaining. Secondly, the anchoring effects, i.e.…”

Section: Introductionmentioning

confidence: 99%

Anchoring of inflation expectations in the euro area: Recent evidence based on survey data

Łyziak

Paloviita

2017

European Journal of Political Economy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The selection and refereeing process for this paper was carried out by the Chairs of the Task Force. Papers were selected based on their quality and on the relevance of the research subject to the aim of the Task Force. The authors of the selected papers were invited to revise their paper to take into consideration feedback received during the preparatory work and the referee's and Editors' comments. Terms of use: Documents in EconStor mayThe paper is released to make the research of LIFT generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the ones of the author(s) and do not necessarily reflect those of the ECB, the ESCB, or any of the ESCB National Central Banks.ECB Working JEL: D84, E52, E58 Keywords:Inflation expectations, anchoring, survey data, euro area, financial crisis. ECB Working Paper 1945, August 2016 2 Non-technical summaryThis paper examines the anchoring of survey-based measures of inflation expectations in the euro area. We consider inflation expectations of professional forecasters and consumers for 1999Q1-2015Q3. In the case of the professional forecasters, we use one-year ahead, two-years ahead and 4-5-years ahead inflation forecasts from the ECB Survey of Professional Forecasters (SPF), conducted every quarter. In the case of consumers, we use the European Commission Consumer survey, which provides a unique set of harmonised monthly data on 12-months ahead consumer inflation expectations across the EU economies. As the survey question is qualitative, we quantify consumer inflation expectations using the probability approach.We analyse anchoring of inflation expectations in the EMU period and pay special attention to possible changes in anchoring over the last few years, a period characterized by low inflation, increased economic uncertainty, zero lower bound (ZLB), and unconventional monetary policy measures. First, we examine the responsiveness of inflation expectations to actual inflation and the reaction of longer-term inflation expectations to shorter-term ones. Then, we analyse the anchoring of long-term inflation expectations to the ECB inflation target and extend this analysis to describe the behaviour of short-and medium-term inflation expectations. The novelty of our approach is in assessing the effectiveness of two main communication tools used by the ECB, the inflation target and the ECB inflation projections provided by the Eurosy...

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Global inflation dynamics in the post-crisis period: What explains the puzzles?

Cited by 40 publications

References 17 publications

Consumers' Attitudes and Their Inflation Expectations

Consumers' Attitudes and Their Inflation Expectations

Consumers' Attitudes and Their Inflation Expectations

Anchoring of inflation expectations in the euro area: Recent evidence based on survey data

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