Trust, but verify. De-anchoring of inflation expectations under learning and heterogeneity

Arbeitspapier

The paper studies how a prolonged period of subdued price developments may induce a de-anchoring of inflation expectations from the central bank's objective. This is shown within a framework where agents form expectations using adaptive learning, choosing among a set of alternative forecasting models. The analysis is accompanied by empirical evidence on the properties of inflation expectations in the euro area. Our results also suggest that monetary policy may lose effectiveness if delayed too much, as expectations are allowed to drift away from target for too long.

Angaben zum Objekt

• ISBN: 978-92-899-2716-1
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: ECB Working Paper ; No. 1994

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Price Level; Inflation; Deflation ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications ; Central Banks and Their Policies ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Thema: DSGE ; expectations de-anchoring ; inflation ; learning

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Busetti, Fabio ; Delle Monache, Davide ; Gerali, Andrea ; Locarno, Alberto
• Ereignis: Veröffentlichung
• (wer): European Central Bank (ECB)
• (wo): Frankfurt a. M.
• (wann): 2017

Weitere Informationen

• DOI: doi:10.2866/755076
• Handle: http://hdl.handle.net/10419/154427
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ