Gorodnichenko, Yuriy; Sergeyev, Dmitriy - National Bureau of Economic Research - 2021
We document a new fact: in U.S., European and Japanese surveys, households do not expect deflation, even in … environments where persistent deflation is a strong possibility. This fact stands in contrast to the standard macroeconomic models … with rational expectations. We extend a New Keynesian model with a zero-lower bound on inflation expectations …