Inflation Expectations as a Policy Tool?

Abstract

for research assistance on this project. We thank Kate McCarthy at Deloitte for providing us with survey data from the Deloitte European CFO Survey. We thank Geoff Kenny for sharing time series of eurozone consumers' inflation expectations and Philippe Andrade for sharing inflation swap data. We thank Ricardo Reis and participants of the 2018 Sintra conference for feedback. This research was funded in part by the National Science Foundation. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Inflation Expectations and Firm Decisions: New Causal Evidence*

“…While previous work has largely focused on how inflation expectations of households relate to their consumption decisions, we show that firms' inflation expectations directly affect their economic decisions as well. This suggests that communication policies of central banks may be able to directly affect firms' decisions through their inflation expectations, if these policies can reach firms (Coibion et al 2018).…”

Inflation Expectations: Review and Evidence

“…For background on market-and survey-based measures of inflation expectations, seeCoibion et al (2018) andGrothe and Meyler (2018) for the United States and the Euro Area, andSousa and Yetman (2016) for EMDEs.…”

Effective Lower Bound Risk

“…Even before the ELB literature blossomed, many papers studied the implication of various nonlinearities on the dynamics of the economy using New Keynesian models (for example, 31 There are more research papers analyzing whether inflation expectations affect the behaviors of households, but the evidence is mixed here as well. See, for example, Ichiue and Nishiguchi (2015), D'Acunto, Hoang, and Weber (2018), Malmendier and Nagel (2016), Armantier, de Bruin, Topa, Klaauw, and Zafar (2015), Abe and Ueno (2015), Coibion, Gorodnichenko, Kumar, and Pedemonte (2018), and Duca, Kenny, and Reuter (2018) for papers finding that inflation expectations affect the behaviors of households. See Bachmann, Berg, and Sims (2015) and Burke and Ozdagli (2013) for papers finding that inflation expectations do not affect the behaviors of households.…”