Policymakers often cite the risk that inflation expectations might "de-anchor" as a key reason for responding forcefully to inflationary shocks. We develop a model to analyze this trade-off and to quantify the benefits of stable long-run inflation expectations. In our framework, households and...

We study why inflation responds differently to economic activity over time. Using survey data covering the universe of Japanese firms, we show that firms are unable to perfectly distinguish aggregate from sector-specific demand changes, leading to positively correlated expectations about these...

This paper studies how lifetime inflation exposure shapes individuals' inflation expectations, perceptions, and financial behavior. Using a large individual-level dataset from Türkiye spanning 2014 to 2024, combined with detailed measures of past inflation experiences, we show that individuals...

We identify desirable/undesirable inflation outcomes under subjective beliefs by comparing surveybased and risk-adjusted distributions of inflation. Intuitively, investors dislike inflation at both extremes, preferring a range in the middle. This "good inflation" region, which investors...

This paper studies the response of inflation expectations to an exogenous shift in central bank preferences. We use the unexpected announcement of the resignation of Jens Weidmann, the president of the Deutsche Bundesbank, in 2021 as a natural experiment constituting a rare case of an exogenous...

We study how inflation expectations can be anchored through different forms of communication and whether such anchoring survives political change. Using a two-wave panel RCT around the 2025 German federal election, we show that providing the ECB's target and projections lowers expectations by...

Using survey data from Austrian households, this paper examines how personality traits influence households' inflation expectations. We measure the Big Five personality traits and show they explain 70 % more of the differences in expectations than sociodemographic factors like age and income...

We measure which economic topics are top of mind using quarterly German household and firm panels from 2020 to 2024, a period that spans the post-pandemic inflation surge and the subsequent disinflation. With these data, we study the determinants and consequences of having inflation top of mind....

Households often struggle to understand policy interventions, limiting the effectiveness of policy transmission. We study how economic policy signals reach and influence households, focusing on the role of professional economists as interpretive intermediaries. When policy signals are complex...

This paper examines the persistent upward bias in euro area households' inflation perceptions and expectations, even when realized inflation is near the ECB's target. It discusses behavioural and informational drivers of this bias, its implications for consumption, wage setting, and monetary...

Professional inflation forecasts contain valuable information but exhibit information frictions. We extract improved forecasts by explicitly modeling these frictions using the US Survey of Professional Forecasters data, and find that forecast rigidity increases systematically with horizon,...

We study how consumers form and revise inflation expectations using a unique, highly balanced monthly panel of Dutch households. We develop a Bayesian framework that nests Full-Information Rational Expectations (FIRE) alongside common forecasting heuristics and test it by recovering...

Using a novel arbitrage-free dynamic term structure model of nominal and real bond prices that accounts for bond-specific liquidity risk premia, this paper provides estimates of bond investors' inflation expectations and associated inflation risk premia in South African sovereign bonds. The...

This paper examines the impact of natural gas market shocks on gas market dynamics, inflation expectations and realized inflation in the Euro Area using a BVAR model. Our contribution lies in a novel identification strategy that distinguishes between various types of shocks of unprecedented...

Previous studies on inflation expectations suggest that agents often overreact to public signals, pointing to a role for behavioral explanations and motivating extensions of standard macroeconomic models beyond full-information rational expectations. Using the survey data that include a variety...

We consider two trade-offs inherent to extraordinary forward guidance (EFG): potency versus flexibility, and the credibility of forward guidance versus the credibility of inflation targeting.We argue that the form of EFG used by the Bank of Canada during the COVID‑19 pandemic balanced both...

This paper studies how households perceive the transmission of monetary policy and how these perceptions affect their decisions. Using a large-scale survey of over 25,000 U.S. households combined with randomized information treatments, we measure how households expect changes in the federal...

This paper provides empirical evidence on a statistically significant pass-through from global energy price shocks to firms' inflation expectations in an oil-importing country. The results show that the size and duration of the pass-through depend crucially on the current local energy pricing...

This paper compares inflation expectations from surveys and financial markets for the short-, medium-, and long-term horizons for Mexico. The analysis covers the period between 2000 and 2024, and compares their descriptive statistics, bias, efficiency, discrepancy, convergence level, and...

The COVID-19 pandemic ended a long period of subdued inflation in Japan and renewed attention to the role of expectations in the transmission of monetary policy. This paper analyzes how Japanese households formed inflation expectations between 2006 and 2022, focusing on periods of unconventional...

Inflation expectations play a central role in monetary policy effectiveness, yet relatively little is known about how individual behavioral traits shape expectation formation. This study examines whether time discounting and hyperbolic discounting, key dimensions of intertemporal preferences,...

We use a randomized experiment in the Bundesbank Online Panel-Households (n ≈ 3, 900) to show that the estimated link between inflation expectations and household consumption flips sign depending on survey wording. This finding reconciles prior contradictory results and has direct implications...