This paper studies how and why inflation expectations have changed since the emergence of Covid-19. Using micro …-year and five-ten year horizons has widened since the surge of inflation during 2021, along with the mean. Persistently high … adaptive learning is able to mimic the change in inflation expectations over time for different demographic groups. The …

Central banks in major industrialized economies were slow to react to the surge in inflation that began in early 2021 … war in Ukraine. We investigate the consequences of policy delay in responding to inflation shocks. First, using a simple … three-period model, we show how policy delay worsens inflation outcomes, but can mitigate or even reverse the output decline …

The consensus among central bankers is that higher inflation expectations can drive up inflation today, requiring … tighter policy. We assess this by devising a novel method for identifying shocks to inflation expectations, estimating a semi … data for the United States, we find that a positive inflation expectations shock is deflationary and contractionary …

This paper presents a model for Inflation Targeting under imperfect policy credibility. It modifies the conventional … time; non-linearities in the inflation equation and in the credibility generating process; and an explicit loss function … model in three ways: an endogenous policy credibility process, by which monetary policy can gain or lose credibility over …

advanced economies and emerging markets to quantify the effects of fiscal tightening on inflation expectations. We find that … fiscal consolidation announcements reduce inflation expectations over the medium-term (three and five-years ahead), but not …" about expected future inflation at longer horizons. The inflation anchoring role of consolidation announcements is enhanced …

This paper examines whether high government debt levels pose a challenge to containing inflation. It does so by … assessing the impact of government debt surprises on inflation expectations in advanced- and emerging market economies. It finds … that debt surprises raise long-term inflation expectations in emerging market economies in a persistent way, but not in …

This paper analyzes the dramatic rise in U.S. inflation since 2020, which we decompose into a rise in core inflation as … measured by the weighted median inflation rate and deviations of headline inflation from core. We explain the rise in core with …-through into core from past shocks to headline inflation. The headline shocks themselves are explained largely by increases in …

This paper identifies and quantifies the drivers of inflation dynamics in the three Baltic economies and assesses the … effectiveness of fiscal policy in fighting inflation. It also analyzes the macroeconomic impact of inflation on competitiveness by … focusing on the relationship between wages and productivity in the tradeable sector. The results reveal that inflation in the …

We examine whether changes in the distribution of household inflation expectations contain information on future … inflation. We first discuss recent shifts in micro data from the US, UK, Germany, and Canada. We then zoom in on the US to … explore econometrically whether distributional characteristics help predict future inflation. We find that the shape of the …