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Empirical evidence suggests consumers rely on their shopping experiences to form beliefs about inflation. In other words, they "learn by shopping". I introduce this empirical observation as an informational friction in the New Keynesian model and use it to study its consequences for the...
Persistent link: https://www.econbiz.de/10015069687
A regime shift towards increased inflation expectations is credited with jumpstarting the recovery from the Great Depression in the United States. Germany experienced a recovery as fast and strong in the 1930s. What role did inflation expectations play at the start of this remarkable economic...
Persistent link: https://www.econbiz.de/10012159651
this distribution became less stable following the Great Recession, subsequent sovereign debt crisis and period when the …
Persistent link: https://www.econbiz.de/10011636332
of the five countries to the 2008 crisis was countercyclical. On the fiscal side, countries had a larger fiscal space in … indicators and a reduction in financing needs in the years before the crisis. On the monetary side, the capacity to implement … countercyclical responses in future crisis episodes, the fiscal authorities should reverse expansionary measures during good times and …
Persistent link: https://www.econbiz.de/10011303276
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Survey data on inflation expectations show that: (i) private sector forecasts and central bank forecasts are not fully aligned and (ii) private sector forecasters disagree about inflation expectations. To reconcile these two facts we introduce dispersed information in a New Keynesian model,...
Persistent link: https://www.econbiz.de/10011520661
How much do term premiums matter for explaining the dynamics of the term structure of interest rates? A lot. We characterize the expected path of nominal and real short-rates as well as inflation using the universe of U.S. surveys of professional forecasters covering more than 500 survey-horizon...
Persistent link: https://www.econbiz.de/10011477349
Why does the short-term slope of the yield curve predict recessions? We explore the economic forces underlying Treasury yields' fluctuations and highlight the roles of a tight monetary policy stance and expectations of lower inflation in predicting downturns. While the monetary policy stance is...
Persistent link: https://www.econbiz.de/10013279282