Higher inflation expectations can cut consumption – research


Shocks that increase consumers’ inflation expectations may cause them to cut their spending, in contrast to standard theoretical predictions, researchers have found.

Olivier Coibion, Dimitris Georgarakos, Yuriy Gorodnichenko and Maarten van Rooij note in their working paper that central banks’ forward guidance, designed to increase inflation expectations, can have “very large effects” in theoretical models, but evidence from actual policy decisions “suggests modest effects at best”. Some have

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: