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Inflation expectations in the euro area: indicators, analyses and models used at Banca d’Italia

Author

Listed:
  • Sara Cecchetti

    (Bank of Italy)

  • Davide Fantino

    (Bank of Italy)

  • Alessandro Notarpietro

    (Bank of Italy)

  • Marianna Riggi

    (Bank of Italy)

  • Alex Tagliabracci

    (Bank of Italy)

  • Andrea Tiseno

    (Bank of Italy)

  • Roberta Zizza

    (Bank of Italy)

Abstract

This paper illustrates the tools used at Banca d’Italia (BI) to monitor the evolution of inflation expectations. The paper also surveys the analyses conducted at BI to assess how inflation expectations affect agents’ choices and the economy. The first part discusses the measures of inflation expectations derived from the prices of inflation-linked financial instruments and from the surveys of professional forecasters. The second part focuses on the measures of households’ and firms’ inflation expectations collected by BI, along with analyses presenting empirical evidence that expectations do indeed drive agents’ economic choices. The last part analyses the overall effect of exogenous changes of inflation expectations on the real economy, through the lens of the macroeconomic models used at BI.

Suggested Citation

  • Sara Cecchetti & Davide Fantino & Alessandro Notarpietro & Marianna Riggi & Alex Tagliabracci & Andrea Tiseno & Roberta Zizza, 2021. "Inflation expectations in the euro area: indicators, analyses and models used at Banca d’Italia," Questioni di Economia e Finanza (Occasional Papers) 612, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_612_21
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2021-0612/QEF_612_21.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    inflation expectations; anchoring; surveys;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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