interest rate has to respond more than one-for-one to fluctuations in the inflation rate. In our setting, the average inflation … rate fluctuates around the inflation target if the computerized central bank obeys the Taylor principle. If the Taylor … principle is violated, then the average inflation rate persistently deviates from the target. We find that these deviations from …

manifestation of this phenomenon is the tendency to neglect future inflation in intertemporal investment decisions. Empirical … evidence for this “inflation ignorance” is hard to establish due to the host of factors that simultaneously change with the … inflation rate. We avoid these identification issues by conducting a controlled and fully incentivized investment experiment. We …

Poor households report significantly higher inflation expectations than rich households. We assess, both theoretically … about aggregate inflation. Using data on shopping experiences, we show that the inflation expectations of each income group … depend on the group's past grocery experiences as well as on past aggregate inflation. To explain this finding, we build a …

We study how inflation and deflation affect firms' ability to cooperate in an experimental Bertrand duopoly with … differentiated products. We find that there is significantly less cooperation in the treatments with inflation and deflation compared … to the no-inflation treatments. The difficulties to cooperate affect prices and welfare: Depending on the market …