Inflation and Deflationary Biases in Inflation Expectations

Publikation: Arbeits- oder Diskussionspapiere und BerichteArbeits- oder Diskussionspapiere

Authors

We explore the consequences of losing confidence in the price-stability objective of central banks by quantifying the inflation and deflationary biases in inflation expectations. In a model with an occasionally binding zero-lower-bound constraint, we show that both inflation bias and deflationary bias can exist as a steady-state outcome. We assess the predictions of this model using unique individual-level inflation expectations data across nine countries that allow for a direct identification of these biases. Both inflation and deflationary biases are present and sizable, but different across countries. Even among the euro-area countries, perceptions of the European Central Bank’s objectives are very distinct.
OriginalspracheEnglisch
ErscheinungsortWashington DC
VerlagBoard of Governors of the Federal Reserve System (US)
Anzahl der Seiten51
DOIs
PublikationsstatusErschienen - 06.2019

DOI