IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp17919.html
   My bibliography  Save this paper

Inflation, Expectations and Monetary Policy: What Have We Learned and to What End?

Author

Listed:
  • Coibion, Olivier

    (University of Texas at Austin)

  • Gorodnichenko, Yuriy

    (University of California, Berkeley)

Abstract

We review recent research and experiences linking inflation and expectations, emphasizing what has been learned since 2020. One clear lesson is that the inflation expectations of most economic agents have been and remain unanchored. The unanchored nature of inflation expectations, in combination with supply shocks, can explain much of the inflation surge and subsequent disinflation when viewed through the lens of an expectations-augmented Phillips curve, both in the U.S. and abroad. New policy frameworks are unlikely to address this feature of expectations. Only a communication strategy that breaks what we refer to as the “cycle of selective inattention” is likely to be successful, but it is probably already too late to stop the next inflation surge.

Suggested Citation

  • Coibion, Olivier & Gorodnichenko, Yuriy, 2025. "Inflation, Expectations and Monetary Policy: What Have We Learned and to What End?," IZA Discussion Papers 17919, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17919
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp17919.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    communication; surveys; inflation expectations; expectations management; randomized controlled trial;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp17919. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.