What Does the Heterogeneity of the Inflation Expectations of Italian Firms Tell Us?

Inflation Expectations and Firm Decisions: New Causal Evidence*

“…Panel B of Figure 3 illustrates that the treatment also has a pronounced effect on the dispersion of beliefs: firms in the control group have systematically more dispersed expectations than those in the treatment group. This is consistent with Bartiloro et al (2017), who similarly find that the provision of information through the SIGE affects the 12month ahead inflation expectations of recipients and reduces the dispersion in their beliefs.…”

“…Bartiloro et al (2017) is another paper related to ours as it relies on the same source of firm-level data and exploits the exogenous information treatment, though for a different purpose. In particular, they are interested in investigating to what extent the cross-sectional heterogeneity of firms' inflation expectations reflects information availability and awareness of recent macroeconomic developments, observable firm characteristics and broader macroeconomic developments.…”

Inflation Expectations and Firms’ Decisions: New Causal Evidence

“…As documented in Appendix Table 2, the results under this alternative assumption are almost identical. 16 A weakly persistent information effect is also reported in Bartiloro et al (2017). We also find that inflation expectations exhibit weak persistence in response to treatment when we use local projections.…”

“…Bartiloro et al (2017) similarly find that the provision of information through the SIGE affects the 12-month ahead inflation expectations of recipients and reduces the dispersion in their beliefs. 11 There are alternative ways to define the treatment.…”

Inflation Expectations in the Euro Area: Indicators, Analyses and Models Used at Banca d’Italia

“…On the other hand, the lack of knowledge about current inflation affects the dispersion of Italian firms' inflation expectations. About half of the disagreement on inflation expectations among Italian companies is attributable to a lack of information about the most recent inflation developments, with the remaining cross sectional dispersion related to developments in selected economic aggregates; however, firms incorporate new information on inflation into their expectations quickly, within one quarter after its release (Bartiloro et al, 2019). The dispersion of firms' expectations, moreover, is higher when inflation is farther away from the ECB's price stability goal, when its short-term swings are larger and when price developments of HICP items are more heterogeneous (Bartiloro et al, 2019).…”