Why Do We Think That Inflation Expectations Matter for Inflation? (And Should We?)
Abstract: Economists and economic policymakers believe that households' and firms' expectations of future inflation are a key determinant of actual inflation. A review of the relevant theoretical and empirical literature suggests that this belief rests on extremely shaky foundations, and a case is made that adhering to it uncritically could easily lead to serious policy errors.
File(s): File format is application/pdf https://www.federalreserve.gov/econres/feds/files/2021062pap.pdf
Part of Series: Finance and Economics Discussion Series
Publication Date: 2021-09-24