A New Approach to Assess Inflation Expectations Anchoring Using Strategic Surveys

Armantier, Olivier; Sbordone, Argia M.; Topa, Giorgio; Van der Klaauw, Wilbert; Williams, John C.

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A New Approach to Assess Inflation Expectations Anchoring Using Strategic Surveys

Abstract: We propose a new approach to assessing the anchoring of inflation expectations using “strategic surveys.” Namely, we measure households’ revisions in long-run inflation expectations after they are presented with different economic scenarios. A key advantage of this approach is that it provides a causal interpretation in terms of how inflation events affect long-run inflation expectations. We implement the method in the summer of 2019 and the spring-summer of 2021 when the anchoring of long-run inflation expectations was in question. We find that the risk of unanchoring of expectations was reasonably low in both periods, and that long-run inflation expectations were essentially as well anchored in August 2021 as in July 2019, before the COVID-19 pandemic.

Keywords: inflation; expectations; anchoring; strategic surveys;

JEL Classification: D12; D84; E31; E52;