We examine the formation of inflation expectations of US consumers, capturing the impact of their other macroeconomic expectations and self-assessments regarding risk aversion and health. Our results suggest that expectations regarding various macroeconomic variables, e.g., expected developments...

Inflation expectations constitute a subject of particular contemporary interest to central banks, especially those pursuing a monetary policy based on a strategy of direct inflation targeting. Macroeconomic theory indicates that the transmission of monetary policy impulses bears a close...