Biases in Survey Inflation Expectations: Evidence from the Euro Area

Biases in Survey Inflation Expectations: Evidence from the Euro Area
READ MORE...
Volume/Issue: Volume 2022 Issue 205
Publication date: September 2022
ISBN: 9798400204401
$20.00
Add to Cart by clicking price of the language and format you'd like to purchase
Available Languages and Formats
paperback else
pdf else
epub else
English
Prices in red indicate formats that are not yet available but are forthcoming.
Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Inflation , Economics- Macroeconomics , Economics / General , Industries - Energy , expectations formation , surveys of expectations , informational rigidities , inflation expectation , survey inflation expectation , responses of inflation expectation , forecasts of inflation , Inflation , Zero lower bound , Oil production , Supply shocks , Global

Summary

This paper documents five facts about inflation expectations in the euro area. First, individual inflation forecasts overreact to individual news. Second, the cross-section average of individual forecasts of inflation underreact to shocks initially, but overreacts in the medium term. Third, disagreement about future inflation increases in response to news when the current inflation is high, and declines when inflation is low, consistent with a zero lower bound of expectations. Fourth, overreaction of individual inflation forecasts to news increased after the global financial crisis (GFC). Fifth, the reaction of average expectations (and of actual inflation) to shocks became more muted post-GFC in the euro area, but not in the U.S.