Inflation and Deflationary Biases in Inflation Expectations

Research output: Working paperWorking papers

Standard

Inflation and Deflationary Biases in Inflation Expectations. / Lamla, Michael; PJaifar, Damian; Rendell, Lea.
Washington DC: Board of Governors of the Federal Reserve System (US), 2019. (Finance and Economics Discussion Series; Vol. 2019, No. 042).

Research output: Working paperWorking papers

Harvard

Lamla, M, PJaifar, D & Rendell, L 2019 'Inflation and Deflationary Biases in Inflation Expectations' Finance and Economics Discussion Series, no. 042, vol. 2019, Board of Governors of the Federal Reserve System (US), Washington DC. https://doi.org/10.17016/FEDS.2019.042

APA

Lamla, M., PJaifar, D., & Rendell, L. (2019). Inflation and Deflationary Biases in Inflation Expectations. (Finance and Economics Discussion Series; Vol. 2019, No. 042). Board of Governors of the Federal Reserve System (US). https://doi.org/10.17016/FEDS.2019.042

Vancouver

Lamla M, PJaifar D, Rendell L. Inflation and Deflationary Biases in Inflation Expectations. Washington DC: Board of Governors of the Federal Reserve System (US). 2019 Jun. (Finance and Economics Discussion Series; 042). doi: 10.17016/FEDS.2019.042

Bibtex

@techreport{a381802f41cb432bbd4755e429ebf3b5,
title = "Inflation and Deflationary Biases in Inflation Expectations",
abstract = "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{\textquoteright}s objectives are very distinct.",
keywords = "Economics, inflation bias, deflationary bias, confidence in central banks, trust, ZLB, inflation expectations, microdata",
author = "Michael Lamla and Damian PJaifar and Lea Rendell",
year = "2019",
month = jun,
doi = "10.17016/FEDS.2019.042",
language = "English",
series = "Finance and Economics Discussion Series",
publisher = "Board of Governors of the Federal Reserve System (US)",
number = "042",
address = "United States",
type = "WorkingPaper",
institution = "Board of Governors of the Federal Reserve System (US)",

}

RIS

TY - UNPB

T1 - Inflation and Deflationary Biases in Inflation Expectations

AU - Lamla, Michael

AU - PJaifar, Damian

AU - Rendell, Lea

PY - 2019/6

Y1 - 2019/6

N2 - 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.

AB - 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.

KW - Economics

KW - inflation bias

KW - deflationary bias

KW - confidence in central banks

KW - trust

KW - ZLB

KW - inflation expectations

KW - microdata

UR - https://www.mendeley.com/catalogue/042039a0-19e6-30a9-a7a1-6af0b636480f/

U2 - 10.17016/FEDS.2019.042

DO - 10.17016/FEDS.2019.042

M3 - Working papers

T3 - Finance and Economics Discussion Series

BT - Inflation and Deflationary Biases in Inflation Expectations

PB - Board of Governors of the Federal Reserve System (US)

CY - Washington DC

ER -

DOI