Memory shapes inflation expectations, study finds

People who remember high inflation also trust the central bank less, authors say


Memory plays a central role in how people form inflation expectations, a new study combining laboratory and survey data finds.

Isabelle Salle, Yuriy Gorodnichenko and Olivier Coibion examine how “lifetime inflation experiences” shape households’ beliefs about future inflation. The work aims to shed light on how the post-Covid inflationary surge will affect expectations in the future.

The paper, published by the US National Bureau of Economic Research, finds people are affected by memories of both

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