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The anchoring of European inflation expectations

Listed author(s):
  • Jan Marc Berk
  • Gerbert Hebbink

This paper analyses the usefulness of direct measures of consumers' perceptions and expectations of inflation for monetary policy and investigates the degree to which these variables are anchored. We inter alia seek to xplore whether there is a difference in reaction of consumers in countries with more credible central banks and those from countries with less credible central banks. We moreover investigate whether the introduction of euro coins and banknotes in 2002, that can be interpreted as a structural shock, has significantly affected the inflation rate as perceived by consumers. We find that European inflation expectations are relatively robust to sudden changes in inflation or monetary policy surprises, regardless of the credibility of the central bank. The introduction of the euro, however, significantly affected the inflation perception of European consumers.

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File URL: http://www.dnb.nl/binaries/Working%20Paper%20116-2006_tcm46-146773.pdf
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Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 116.

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Date of creation: Oct 2006
Handle: RePEc:dnb:dnbwpp:116
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Web page: http://www.dnb.nl/en/

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  1. Kuttner, Kenneth N., 2001. "Monetary policy surprises and interest rates: Evidence from the Fed funds futures market," Journal of Monetary Economics, Elsevier, vol. 47(3), pages 523-544, June.
  2. Jan Marc Berk, 2000. "Consumers' Inflation Expectations and Monetary Policy in Europe," MEB Series (discontinued) 2000-6, Netherlands Central Bank, Monetary and Economic Policy Department.
  3. Adalbert Knöbl, 1974. "Price Expectations and Actual Price Behavior in Germany (Allemagne: anticipations et évolution effective des prix) (Expectativas y comportamiento real de los precios en Alemania)," IMF Staff Papers, Palgrave Macmillan, vol. 21(1), pages 83-100, March.
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  10. Jan Marc Berk, 1999. "Measuring inflation expectations: a survey data approach," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1467-1480.
  11. Yin-Wong Cheung & Menzie Chinn, 1995. "Integration, cointegration and the forecast consistency of structural exchange rate models," International Finance 9508002, EconWPA.
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  16. Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," NBER Working Papers 5893, National Bureau of Economic Research, Inc.
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  18. Bernd Hayo, 1998. "Money-Output Granger Causality Revisited: An Empirical Analysis of EU Countries," Macroeconomics 9809009, EconWPA.
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  25. Lyziak, Tomasz, 2003. "Consumer inflation expectations in Poland," Working Paper Series 0287, European Central Bank.
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  29. repec:pri:cepsud:101mastrobuoni is not listed on IDEAS
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