IDEAS home Printed from https://ideas.repec.org/a/aea/apandp/v115y2025p266-70.html
   My bibliography  Save this article

Do Inflation Expectations Become More Anchored during a Disinflation Episode? Evidence for Euro Area Firms

Author

Listed:
  • Ursel Baumann
  • Annalisa Ferrando
  • Dimitris Georgarakos
  • Yuriy Gorodnichenko
  • Timo Reinelt

Abstract

Does a successful disinflation contribute to the anchoring of inflation expectations? We provide novel survey evidence on the dynamics of euro area firms' inflation expectations during the disinflation episode since 2022. We show that firms' short-term inflation expectations declined steadily towards the inflation target as the disinflation progressed. However, we also document a thick tail in longer-term inflation expectations, substantial disagreement about the inflation outlook, and an increased sensitivity of longer-term inflation expectations to short-term inflation expectations. These findings suggest that it may take more time to bring inflation expectations fully in line with central bank objectives.

Suggested Citation

  • Ursel Baumann & Annalisa Ferrando & Dimitris Georgarakos & Yuriy Gorodnichenko & Timo Reinelt, 2025. "Do Inflation Expectations Become More Anchored during a Disinflation Episode? Evidence for Euro Area Firms," AEA Papers and Proceedings, American Economic Association, vol. 115, pages 266-270, May.
    • Handle: RePEc:aea:apandp:v:115:y:2025:p:266-70
    DOI: 10.1257/pandp.20251019
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/pandp.20251019
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://doi.org/10.3886/E224103V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/materials/23086
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/materials/23087
    Download Restriction: no
    File URL: https://libkey.io/10.1257/pandp.20251019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:apandp:v:115:y:2025:p:266-70. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.