The starting point of the paper is the question of the current level of perceived inflation (by consumers) in Germany … and the (quantitative) difference between perceived inflation and officially measured inflation This paper shows that … there is a very large difference between the official measured inflation rate and perceived inflation in Germany. While the …

uncertainty. In our model, private agents update their perceived inflation target and the central bank estimates unobservable … economic shocks as well as the perceived inflation target. Under those two uncertainties, the learning process of both private …