Influencing household inflation expectations

Alberto Cavallo, Guillermo Crucas, Ricardo Perez-Truglia 10 November 2014

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Expectations about macroeconomic variables play an important role in economic theory and policymaking. Household inflation expectations, in particular, are key to understand consumption and investment decisions, and ultimately, the impact of monetary policies. Although central banks have a natural desire to influence expectations, there is no consensus on how household expectations are formed or what the best way to affect them is (see Bernanke 2007, Bachmann et al. 2012, Coibion and Gorodnichenko 2013, and Armantier et al. 2014).

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Topics:  Monetary policy

Tags:  expectations, beliefs, inflation, inflation expectations, monetary policy, US, Argentina, central bank communication, rational inattention, costly information, learning

Disagreement about inflation expectations: The case of Japanese households

Shusaku Nishiguchi, Jouchi Nakajima, Kei Imakubo 02 May 2014

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It is well known that inflation expectations vary across agents. Nevertheless, this fact has attracted little attention. Analysis of inflation expectations typically tend to focus on measures such as the mean and the median of such expectations. One of the distinguished exceptions is Mankiw et al. (2003), who discuss in a context of sticky information how the disagreement in US households' inflation expectations was evolving through the Volcker disinflation. Our recent research (Nishiguchi et al. 2014) has brought the disagreement issue once again to the fore.

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Topics:  Monetary policy

Tags:  inflation, Japan, inflation expectations

Are the golden years of central banking over?

Stefan Gerlach, Alberto Giovannini, Cédric Tille 17 July 2009

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Central banks have responded decisively to the ongoing financial and economic crisis by intervening forcefully and in innovative ways to support the financial system and the economy. In a report published today, we review the background and evolution of the crisis, focusing on what lessons central banks should draw (Gerlach, Giovannini, Tille, and Viñals 2009).

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Topics:  Global crisis Monetary policy

Tags:  macro-prudential regulation, inflation expectations

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