We implement a survey-based randomized information treatment that generates independent variation in the inflation … expectations and the uncertainty about future inflation of European households. This variation allows us to assess how both first … and second moments of inflation expectations separately affect subsequent household decisions. We document several key …

This paper develops two models, one involving risk neutrality and the other risk aversion, which suggest that inflation … uncertainty affects interest rates. Both models give rise to essentially the same interest rate equation for estimation. Empirical … evidence supports the hypothesis that inflation uncertainty affects interest rates. Interpreted in terms of the risk neutral …

This paper asks whether a textbook Phillips curve can explain the behavior of core inflation in the euro area. A … critical feature of the analysis is that we measure core inflation with the weighted median of industry inflation rates, which … is less volatile than the common measure of inflation excluding food and energy prices. We find that fluctuations in core …

This paper provides an explanation for the run-up of U.S. inflation in the 1960s and 1970s and the sharp disinflation … by low inflation. However, prolonged episodes of high inflation ending with rapid disinflations can occur when … policymakers underestimate both the natural rate of unemployment and the persistence of inflation in the Phillips curve. I estimate …

good job of explaining the deviations of household inflation and unemployment expectations from the `rational expectations … of different demographic groups have sharply different predictions for macroeconomic aggregates like the inflation rate …

We consider the puzzling behavior of interest rates and inflation in the United States and the United Kingdom between … World War I; the average inflation rate was 3.8 percentage points higher in the second period than in the first. Yet nominal … consistent with rational expectations if inflation were not forecastable, and indeed univariate tests show little sign of serial …

A key policy question is: How high an inflation rate should central banks target? This depends crucially on the costs … of inflation. An important concern is that high inflation will lead to inefficient price dispersion. Workhorse New … Keynesian models imply that this cost of inflation is very large. An increase in steady state inflation from 0% to 10% yields a …

This paper examines the recent behavior of core inflation in the United States. We specify a simple Phillips curve … based on the assumptions that inflation expectations are fully anchored at the Federal Reserve's target, and that labor …-market slack is captured by the level of short-term unemployment. This equation explains inflation behavior since 2000, including …

We use a unique design feature of a survey of Italian firms to study the causal effect of inflation expectations on … recent inflation whereas other firms are not. This information treatment generates exogenous variation in inflation … expectations. We find that higher inflation expectations on the part of firms leads them to raise their prices, increase demand for …