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The Subjective Inflation Expectations of Households and Firms: Measurement, Determinants, and Implications

Author

Listed:
  • Weber, Michael

    (University of Chicago)

  • D’Acunto, Francesco

    (Georgetown University)

  • Gorodnichenko, Yuriy

    (University of California, Berkeley)

  • Coibion, Olivier

    (University of Texas at Austin)

Abstract

Households' and firms' subjective inflation expectations play a central role in macroeconomic and intertemporal microeconomic models. We discuss how subjective inflation expectations are measured, the patterns they display, their determinants, and how they shape households' and firms' economic choices in the data and help us make sense of the observed heterogeneous reactions to business-cycle shocks and policy interventions. We conclude by highlighting the relevant open questions and why tackling them is important for academic research and policy making.

Suggested Citation

  • Weber, Michael & D’Acunto, Francesco & Gorodnichenko, Yuriy & Coibion, Olivier, 2022. "The Subjective Inflation Expectations of Households and Firms: Measurement, Determinants, and Implications," IZA Discussion Papers 15391, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15391
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    More about this item

    Keywords

    macroeconomics; intertemporal choice; consumption; savings; surveys; monetary policy; fiscal policy; experiments; financial decision-making; cognition; communication;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E7 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics
    • J1 - Labor and Demographic Economics - - Demographic Economics

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