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Inflation Levels and (In)Attention
[On a System of Inequalities in Demand Analysis: An Extension of the Classical Method]

Author

Listed:
  • Anat Bracha
  • Jenny Tang

Abstract

Inflation expectations are key determinants of economic activity and are central to the current policy debate about whether inflation expectations will remain anchored in the face of recent pandemic-related increases in inflation. This article explores evidence of inattention by constructing two novel and direct measures of consumers’ inattention, and documents greater attention when inflation is high. This relationship can explain a substantial portion of the flattening of the Phillips curve and also suggests the possibility of upward attention-price spirals.

Suggested Citation

  • Anat Bracha & Jenny Tang, 2025. "Inflation Levels and (In)Attention [On a System of Inequalities in Demand Analysis: An Extension of the Classical Method]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 92(3), pages 1564-1594.
    • Handle: RePEc:oup:restud:v:92:y:2025:i:3:p:1564-1594.
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    File URL: http://hdl.handle.net/10.1093/restud/rdae063
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    Cited by:

    1. Jonathan Benchimol & Lahcen Bounader & Mario Dotta, 2025. "Estimating Behavioral Inattention," CAMA Working Papers 2025-34, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

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