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Firms’ Inflation and Wage Expectations During the Inflation Surge

Author

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  • Erwan Gautier
  • Frédérique Savignac
  • Olivier Coibion

Abstract

Using a new survey of French firms spanning the full 2020–2025 inflation cycle, we document that de-anchoring and passthrough decoupled during the inflation surge: the firms whose expectations drifted furthest from target were precisely those that did not act on them, while firms that embedded expectations into wages and prices remained relatively well anchored. A growing tail of firms expected persistently high inflation — “inflation disasters” — but these were disproportionately smaller, less attentive firms extrapolating local cost pressures. As a result, the surge in expectations did not generate wage-price dynamics, limiting the scope for a self-sustaining inflation spiral.

Suggested Citation

  • Erwan Gautier & Frédérique Savignac & Olivier Coibion, 2025. "Firms’ Inflation and Wage Expectations During the Inflation Surge," NBER Working Papers 33799, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33799
    Note: EFG ME
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    Cited by:

    1. Okan Akarsu & Emrehan Aktuğ & Huzeyfe Torun, 2025. "Inflation Expectations and Firms' Decisions in High Inflation: Evidence from a Randomized Control Trial," CESifo Working Paper Series 12210, CESifo.

    More about this item

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • 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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