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Heterogeneity in Consumers' Economic Expectations Across Euro Area Countries

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Listed:
  • Lena Dräger
  • Michal Marenčák
  • Giang Nghiem
  • Maritta Paloviita

Abstract

This paper examines cross-country differences in consumer expectations about macroeconomic outcomes and mortgage borrowing conditions within a monetary union. Using harmonized microdata from the ECB Consumer Expectations Survey for eleven euro area countries, we document significant national disparities. By sequentially adding a rich set of consumer- and country-specific macro controls to pooled regressions with country fixed effects, we find that these factors account for much, but not all, of the cross-country heterogeneity in expectations. These remaining differences likely reflect unobserved country-specific factors, highlighting the need for country-tailored monetary policy communication to effectively stabilize consumer expectations.

Suggested Citation

  • Lena Dräger & Michal Marenčák & Giang Nghiem & Maritta Paloviita, 2026. "Heterogeneity in Consumers' Economic Expectations Across Euro Area Countries," CESifo Working Paper Series 12725, CESifo.
    • Handle: RePEc:ces:ceswps:_12725
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    Keywords

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    JEL classification:

    • 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
    • D30 - Microeconomics - - Distribution - - - General
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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