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How anchored are inflation expectations in EMU countries?

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  • van der Cruijsen, Carin
  • Demertzis, Maria

Abstract

Anchored inflation expectations help stabilize inflation. Previous results indicate that monetary policy has been effective in breaking the link between actual and expected inflation at the euro area level. In this paper we examine whether this is also true at the national level. We define the ‘disconnect’ between inflation and inflation expectations and then proceed to examine the extent to which this disconnect exists for a number of euro area countries. Our findings suggest that for some countries, their own inflation experiences still affect national inflation expectations, and certainly more by comparison to how they affect the aggregate euro area level.

Suggested Citation

  • van der Cruijsen, Carin & Demertzis, Maria, 2011. "How anchored are inflation expectations in EMU countries?," Economic Modelling, Elsevier, vol. 28(1), pages 281-298.
  • Handle: RePEc:eee:ecmode:v:28:y:2011:i:1:p:281-298
    DOI: 10.1016/j.econmod.2010.09.001
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    Citations

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    Cited by:

    1. Rodrigo Mariscal & Andrew Powell & Pilar Tavella, 2014. "On the Credibility of Inflation Targeting Regimes in Latin America," IDB Publications (Working Papers) 6604, Inter-American Development Bank.
    2. Pierdzioch, Christian & Rülke, Jan-Christoph, 2013. "Do inflation targets anchor inflation expectations?," Economic Modelling, Elsevier, vol. 35(C), pages 214-223.
    3. Rülke, Jan-Christoph & Frenkel, Michael & Lis, Eliza, 2013. "Do budget balance rules anchor budget balance expectations? -- Some international evidence," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80050, Verein für Socialpolitik / German Economic Association.
    4. Łyziak, Tomasz & Paloviita, Maritta, 2017. "Anchoring of inflation expectations in the euro area: Recent evidence based on survey data," European Journal of Political Economy, Elsevier, vol. 46(C), pages 52-73.
    5. Speck, Christian, 2016. "Inflation Anchoring in the Euro Area," Annual Conference 2016 (Augsburg): Demographic Change 145697, Verein für Socialpolitik / German Economic Association.
    6. Young Bin Ahn & Yoichi Tsuchiya, 2016. "Directional analysis of consumers’ forecasts of inflation in a small open economy: evidence from South Korea," Applied Economics, Taylor & Francis Journals, vol. 48(10), pages 854-864, February.
    7. Ehrmann, Michael & Soudan, Michel & Stracca, Livio, 2012. "Explaining EU Citizens' Trust in the ECB in Normal and Crisis Times," Economics Series 289, Institute for Advanced Studies.
    8. Speck, Christian, 2016. "Inflation anchoring in the euro area," Discussion Papers 04/2016, Deutsche Bundesbank.
    9. Bodo Herzog, 2015. "Anchoring of expectations: The role of credible targets in a game experiment," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 3(6), pages 1-15, December.
    10. Speck, Christian, 2017. "Inflation anchoring in the euro area," Working Paper Series 1998, European Central Bank.
    11. repec:spr:portec:v:16:y:2017:i:3:d:10.1007_s10258-017-0129-x is not listed on IDEAS
    12. Łyziak, Tomasz & Paloviita, Maritta, 2017. "Formation of inflation expectations in turbulent times : Can ECB manage inflation expectations of professional forecasters?," Research Discussion Papers 13/2017, Bank of Finland.
    13. Mayes David & Paloviita Maritta & Viren Matti, 2015. "The EMU and the anchoring of inflation expectations?," Discussion Papers 103, Aboa Centre for Economics.
    14. Kenny, Geoff & Dovern, Jonas, 2017. "The long-term distribution of expected inflation in the euro area: what has changed since the great recession?," Working Paper Series 1999, European Central Bank.
    15. Arnold, Ivo J.M. & Soederhuizen, Beau, 2016. "Internal or external devaluation? What does the EC Consumer Survey tell us about macroeconomic adjustment in the Euro area?," Journal of International Money and Finance, Elsevier, vol. 64(C), pages 88-103.
    16. Rodrigo Mariscal & Andrew Powell & Pilar Tavella, 2014. "On the Credibility of Inflation Targeting Regimes in Latin America," IDB Publications (Working Papers) 86253, Inter-American Development Bank.
    17. Jakob de Haan & Marco Hoeberichts & Renske Maas & Federica Teppa, 2016. "Inflation in the euro area and why it matters," DNB Occasional Studies 1403, Netherlands Central Bank, Research Department.

    More about this item

    Keywords

    Inflation expectations; Monetary policy; EMU; Inflation; ECB;

    JEL classification:

    • 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

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