How to Limit the Spillover from the 2021 Inflation Surge to Inflation Expectations?
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How to Limit the Spillover from the 2021 Inflation Surge to Inflation Expectations? / Dräger, Lena; Lamla, Michael J.; Pfajfar, Damjan.
Lüneburg : Institut für Volkswirtschaftslehre der Universität Lüneburg, 2022. (University of Lüneburg Working Paper Series in Economics; No. 407).Research output: Working paper › Working papers
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TY - UNPB
T1 - How to Limit the Spillover from the 2021 Inflation Surge to Inflation Expectations?
AU - Dräger, Lena
AU - Lamla, Michael J.
AU - Pfajfar, Damjan
PY - 2022/1/25
Y1 - 2022/1/25
N2 - By providing numerical inflation projections. Many central banks currently face inflation well above their targets and with that the challenge to prevent spillovers on inflation expectations.We study the effect of different communication about the 2021 inflation surge on German consumers’ inflation expectations using a randomized control trial. We show that information about rising inflation increases short- and long-term inflation expectations. This initial increase in expectations can be mitigated using information about inflation projections, where numerical information about professional forecasters’ projections seems to reduce inflation expectations by more than policymaker’s characterization of inflation as a temporary phenomenon.
AB - By providing numerical inflation projections. Many central banks currently face inflation well above their targets and with that the challenge to prevent spillovers on inflation expectations.We study the effect of different communication about the 2021 inflation surge on German consumers’ inflation expectations using a randomized control trial. We show that information about rising inflation increases short- and long-term inflation expectations. This initial increase in expectations can be mitigated using information about inflation projections, where numerical information about professional forecasters’ projections seems to reduce inflation expectations by more than policymaker’s characterization of inflation as a temporary phenomenon.
KW - Economics
KW - Short-run and long-run inflation expectations
KW - inflation surge
KW - randomized control
KW - survey experiment
KW - persistent or transitory inflation shock
M3 - Working papers
T3 - University of Lüneburg Working Paper Series in Economics
BT - How to Limit the Spillover from the 2021 Inflation Surge to Inflation Expectations?
PB - Institut für Volkswirtschaftslehre der Universität Lüneburg
CY - Lüneburg
ER -