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Household inflation expectations and inflation dynamics

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  • Péter Gábriel

    ()
    (Magyar Nemzeti Bank)

Abstract

Although in modern monetary economics it is usually assumed that inflation expectations play a prominent role when economic agents set prices and wages, the empirical evidence for this link is scarce. This paper aims to identify the effect of changes in inflation expectations on prices and wages in an SVAR framework for three inflation targeting countries (Czech Republic, Hungary and United Kingdom). The results show that in all countries the effect is significant. In comparison with the United Kingdom and the Czech Republic, inflation expectations in Hungary are more volatile and less anchored, which can be an important source of the high volatility of the inflation rate.

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Bibliographic Info

Paper provided by Magyar Nemzeti Bank (the central bank of Hungary) in its series MNB Working Papers with number 2010/12.

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Length: 29 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:mnb:wpaper:2010/12

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Keywords: inflation expectations; consumer survey;

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References

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Cited by:
  1. Piotr Białowolski & Tomasz Kuszewski & Bartosz Witkowski, 2010. "Business Survey Data in Forecasting Macroeconomic Indicators with Combined Forecasts," Contemporary Economics, University of Finance and Management in Warsaw, vol. 4(4), December.
  2. Katalin Szilágyi & Dániel Baksa & Jaromir Benes & Ágnes Horváth & Csaba Köber & Gábor D. Soós, 2013. "The Hungarian Monetary Policy Model," MNB Working Papers 2013/1, Magyar Nemzeti Bank (the central bank of Hungary).

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