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Inflation Expectations, Inflation Target Credibility, and the COVID‐19 Pandemic: Evidence from Germany

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  • WINNIE COLEMAN
  • DIETER NAUTZ

Abstract

Using the exact wording of the European Central Bank's definition of price stability, we started a representative online survey of German citizens in January 2019 that is designed to measure long‐term inflation expectations and the credibility of the inflation target. Our results indicate that credibility has decreased in our sample period, particularly in the course of the deep recession implied by the Covid‐19 pandemic. Interestingly, even though inflation rates in Germany have been clearly below 2% for several years, credibility has declined mainly because Germans increasingly expect that inflation will be much higher than 2% over the medium term. We investigate how inflation expectations and the impact of the pandemic depend on personal characteristics including age, gender, education, and political attitude.

Suggested Citation

  • Winnie Coleman & Dieter Nautz, 2023. "Inflation Expectations, Inflation Target Credibility, and the COVID‐19 Pandemic: Evidence from Germany," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(7), pages 1937-1953, October.
    • Handle: RePEc:wly:jmoncb:v:55:y:2023:i:7:p:1937-1953
    DOI: 10.1111/jmcb.12998
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    Cited by:

    1. Bharat Diwakar & Jakir Hussain Mazumder, 2025. "Older population, inflation expectations, and COVID-19: evidence from India’s household expectation survey," International Economics and Economic Policy, Springer, vol. 22(4), pages 1-39, October.
    2. Alex, Dony, 2025. "Inflation targeting and the changing transmission mechanism of monetary policy in India," Economic Modelling, Elsevier, vol. 151(C).
    3. Ehrmann, Michael & Georgarakos, Dimitris & Kenny, Geoff, 2025. "Credibility gains from central bank communication with the public," European Economic Review, Elsevier, vol. 177(C).
    4. Grebe, Moritz & Tillmann, Peter, 2026. "Inflation expectations and a conservative central banker: Evidence from a natural experiment," IMFS Working Paper Series 234, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    5. Coleman, Winnie & Nautz, Dieter, 2025. "Asymmetric inflation target credibility," CFS Working Paper Series 731, Center for Financial Studies (CFS).
    6. Abdelkader Aguir, 2025. "Post-COVID Monetary Policy Challenges in Emerging Economies: Revisiting the Effectiveness of Inflation Targeting [Les défis de la politique monétaire post-COVID dans les économies émergentes : revisiter l’efficacité du ciblage de l’inflation]," Post-Print hal-05136089, HAL.
    7. Coleman, Winnie & Nautz, Dieter, 2025. "Asymmetric inflation target credibility," Journal of International Money and Finance, Elsevier, vol. 157(C).
    8. Winnie Coleman & Dieter Nautz, 2025. "Asymmetric Inflation Target Credibility," Berlin School of Economics Discussion Papers 0060, Berlin School of Economics.

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