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Lifetime Memories of Inflation: Evidence from Surveys and the Lab

Author

Listed:
  • Salle, Isabelle

    (University of Ottawa)

  • Gorodnichenko, Yuriy

    (University of California, Berkeley)

  • Coibion, Olivier

    (University of Texas at Austin)

Abstract

We study how individuals' memories of inflation shape their expectations about future inflation using both surveys and laboratory experiments. Recalling having lived through prior disinflations has pronounced effects on how long-lived people expect the current inflation episode to last. Information treatments in which we show people prior disinflationary experiences similarly strongly reduce inflation expectations of individuals on average and are often recalled as inflation memories months later. We also show that when people try to forecast inflation in the lab, the inflation dynamics in the game can affect their beliefs much like the inflation experienced in real life. Methodologically, we compare and contrast surveys and lab experiments and discuss the pros and cons of each method, emphasizing the general consistency across the two methodologies.

Suggested Citation

  • Salle, Isabelle & Gorodnichenko, Yuriy & Coibion, Olivier, 2023. "Lifetime Memories of Inflation: Evidence from Surveys and the Lab," IZA Discussion Papers 16670, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16670
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    Cited by:

    1. Dimitris Georgarakos & Kwang Hwan Kim & Oliver Coibion & Myungkyu Shim & Myunghwan Andrew Lee & Yuriy Gorodnichenko & Geoff Kenny & Seowoo Han & Michael Weber, 2025. "How Costly Are Business Cycle Volatility And Inflation? A Vox Populi Approach," Working papers 2025rwp-241, Yonsei University, Yonsei Economics Research Institute.
    2. Irina A. Beloglazova & Aleksey A. Korikov & Konstantin P. Yurchenko, 2025. "Inflation expectations and perceptions: Experimental evaluations and opportunities for central banks’ communication policy," Journal of New Economy, Ural State University of Economics, vol. 26(1), pages 50-68, April.
    3. Olena Kostyshyna & Isabelle Salle & Hung Truong, 2025. "Anchored Inflation Expectations: What Recent Data Reveal," Staff Working Papers 25-5, Bank of Canada.

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    Keywords

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    JEL classification:

    • 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

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