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Narratives on the causes of inflation in Germany: First results of a pilot study

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  • Demgensky, Lisa
  • Fritsche, Ulrich

Abstract

Since 2021, the inflation rate in Germany and the euro area has increased significantly. At the same time, there are increasing signs of ``de-anchoring'' of inflation expectations in Germany. This paper - building on the approach of Andre et al. (2022) - examines in a pilot study survey-based narratives for the rising inflation together with socio-economic factors. A mixed-methods approach is used to classify the narratives, with clustering based on statistical criteria. A regression analysis is used to examine the relationship between socio-economic factors and narratives on the one hand, and the relationship between narratives/clusters of narratives and a de-anchoring of inflation expectations on the other hand. We can associate certain narratives with socio-economic characteristics and political partisanship. Narrative complexity is a function of education and literacy. Narrative clusters correspond to certain milieus and dimensions of socio-economic stratification. Narratives of supply shortages and price gouging are positively correlated with anchored expectations; demand and government plus other narratives are negatively correlated with anchored expectations.

Suggested Citation

  • Demgensky, Lisa & Fritsche, Ulrich, 2023. "Narratives on the causes of inflation in Germany: First results of a pilot study," WiSo-HH Working Paper Series 77, University of Hamburg, Faculty of Business, Economics and Social Sciences, WISO Research Laboratory.
    • Handle: RePEc:zbw:uhhwps:77
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    References listed on IDEAS

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    More about this item

    Keywords

    Narratives; expectation formation; inflation; Germany;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy

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