Responsiveness of consumers' medium-term inflation expectations : evidence from a new euro area survey
Stanisławska, Ewa; Paloviita, Maritta (29.06.2021)
Numero
10/2021Julkaisija
Bank of Finland
2021
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-202106291311Tiivistelmä
Using the ECB Consumer Expectations Survey, this paper investigates revisions of medium-term inflation expectations. We provide robust evidence that consumers adjust medium-term inflation views in response to changes in short-term inflation expectations and, to a lesser degree, to changes in inflation perceptions. We find that the strong adverse Covid-19 shock contributed to an increase in consumer inflation expectations. We show that both higher financial literacy and higher trust in the central bank reduce responsiveness
of medium-term inflation expectations, which supports their stability. Our results increase understanding of expectations formation, which is essential for medium-term oriented monetary policy.
of medium-term inflation expectations, which supports their stability. Our results increase understanding of expectations formation, which is essential for medium-term oriented monetary policy.
Julkaisuhuomautus
A revised version published on 28 June 2022 replaces the BoF DP 10/2021 of the name "Medium- vs. short-term consumer inflation expectations: evidence from a new euro area survey”.