Monetary Policy Communications and their Effects on Household Inflation Expectations

Coibion, Olivier; Gorodnichenko, Yuriy; Weber, Michael

doi:10.3386/w25482

Cited by 108 publications

(44 citation statements)

References 15 publications

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“…For example, both AIT and IT treatments lead to lower average inflation expectations by about 0.5 percentage point per year. This reduction in average inflation expectations after being told about the Fed's inflation target is consistent with prior evidence in Coibion, Gorodnichenko, and Weber (2019). Both treatments also point toward reduced probabilities of seeing inflation above 5%, although neither effect is precisely estimated.…”

Section: Is Average Inflation Targeting Likely To Significantly Influence Households'supporting

confidence: 83%

“…With the latter, our paper also relates to a growing literature applying RCT methods to macroeconomic topics, building on earlier work by Armantier et al (2016), Cavallo, Cruces, and Perez-Truglia (2017), and others. Coibion, Gorodnichenko, and Weber (2019), for example, study how different types of information about inflation or monetary policy affect households' inflation expectations. Binder and Rodrigue (2018) provide information about the inflation target to characterize the response of longrun inflation expectations.…”

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confidence: 99%

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Average Inflation Targeting and Household Expectations

Coibion

Gorodnichenko

Knotek

et al. 2020

Working Paper (Federal Reserve Bank of Cleveland)

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Using a daily survey of U.S. households, we study how the Federal Reserve's announcement of its new strategy of average inflation targeting affected households' expectations. Starting with the day of the announcement, there is a very small uptick in the minority of households reporting that they had heard news about monetary policy relative to prior to the announcement, but this effect fades within a few days. Those hearing news about the announcement do not seem to have understood the announcement: they are no more likely to correctly identify the Fed's new strategy than others, nor are their expectations different. When we provide randomly selected households with pertinent information about average inflation targeting, their expectations still do not change in a different way than when households are provided with information about traditional inflation targeting. JEL classification codes: E3, E4, E5.

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Section: Is Average Inflation Targeting Likely To Significantly Influence Households'supporting

confidence: 83%

mentioning

confidence: 99%

Average Inflation Targeting and Household Expectations

Coibion

Gorodnichenko

Knotek

et al. 2020

Working Paper (Federal Reserve Bank of Cleveland)

Self Cite

View full text Add to dashboard Cite

show abstract

“…Thus our study makes two points. First, despite the steadiness of the median 10-year forecast, individual SPF respondents are not anchored to the Fed's target (a finding consistent with Binder (2017b) and Coibion et al (2019)). Second, notable progress has been made in expectations becoming anchored (in keeping with Doh and Oksol (2018)).…”

Section: Resultsmentioning

confidence: 91%

Thinking Outside the Box: Do SPF Respondents Have Anchored Inflation Expectations?

Binder¹,

Janson

Verbrugge

2019

Working Paper (Federal Reserve Bank of Cleveland)

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Despite the stability of the median 10-year inflation expectations in the Survey of Professional Forecasters (SPF) near 2 percent, we show that not a single SPF respondent's expectations have been anchored at the target since the Federal Open Market Committee's (FOMC) enactment of an inflation target in January 2012, or even since 2015. However, we find significant evidence for "delayed anchoring," or a move toward being anchored, particularly after the federal funds rate lifted off in December 2015.

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“…The results implied that when the inflation increased by one unit, the cost of living would increase by 0.2542 units while holding other factors constant. Coibion, Gorodnichenko and Weber (2019) articulated that inflation raises the cost-of-living price of commodities and lowers the chances of obtaining good jobs. This situation directly influences families' earnings and their investing capabilities.…”

Section: Stratford Peer Reviewed Journals and Book Publishing Journal...mentioning

confidence: 99%

Influence of Inflation on Cost of Living among the Urban Residents in Turkey

2022

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Inflation is the increase in the price of products and services over some time. In some instances, inflation affects all aspects of the economy, from consumer spending, business investment and employment rates to government programs, tax policies and interest rates. The Turkish economy has experienced a reasonably high rising cost of living and unsuccessful disinflation programs within the past three decades. Thus, the study sought to examine the influence of inflation on the cost of living among urban residents in Turkey. The study used a descriptive research design. The target population included residents from Istanbul, Ankara and İzmir. A simple random sampling technique was used to get the sample size. The simple random sampling enabled any of the residents to have an equal chance to be included in the study. The sample size used was 479 people. The analysis of the data was done using descriptive and inferential statistics. The study findings indicated that inflation positively and significantly affects the cost of living. The increase in inflation increases the cost of living. The regression results showed a positive and significant relationship between inflation and the cost of living. The increase in the inflation rate increases the costs of factors of production and the burden is passed to consumers. It was noted that inflation affects the urban residents more than those in the rural areas. The high cost of living makes people more susceptible. The study concluded that inflation had increased the cost of living. The study recommended that measures be implemented to ensure that inflation remains as low as possible. The government needs to develop policies to ensure inflation does not rise consistently. The government needs to create effective macro-economic plans to cushion the poor during high inflation.

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Monetary Policy Communications and their Effects on Household Inflation Expectations

Cited by 108 publications

References 15 publications

Average Inflation Targeting and Household Expectations

Average Inflation Targeting and Household Expectations

Thinking Outside the Box: Do SPF Respondents Have Anchored Inflation Expectations?

Influence of Inflation on Cost of Living among the Urban Residents in Turkey

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