expectations assumption, we show the transition may initially be inflationary. …

Consumers' inflation expectations play a key role in the monetary transmission mechanism. As such, it is crucial for … expectations. These include the apparent overestimation of inflation by consumers as well as the negative correlation observed … between the economic outlook and inflation expectations. We also show that the uncertainty framework fits with some of the …

This paper uses survey data to assess consumers' inflation expectations in the euro area. The probability approach is … used to derive quantitative estimates of inflation expectations from the European Commission's Consumer Survey. The paper … subsequently analyses the empirical properties of the estimated inflation expectations by considering the extent to which they …

may or may not coordinate on the rational equilibrium outcome. A general finding is that under positive expectations … feedback (strategic complementarity) -where optimistic (pessimistic) expectations can cause a boom (bust)- coordination … by coordination on trend-following behavior leading to (almost-)self-fulfilling equilibria. Heterogeneous expectations …

We provide a new theory of expectations-driven business cycles in which consumers' learning from prices dramatically …