Book contents
- The Behavioral Economics of Inflation Expectations
- The Behavioral Economics of Inflation Expectations
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Preface
- 1 Patterns and Expectations
- 2 Extrapolation and Expectations
- 3 Eliciting Expectations under Laboratory Conditions
- 4 Features of the Laboratory Data
- 5 Similarity Matching and Scaling the Experimental Data
- 6 Pattern Extrapolation and Expectations Measured by Consumer Surveys
- 7 Heterogeneity and Uncertainty of Inflation Expectations
- 8 Inflation Dynamics
- 9 Explaining the Course of Interest Rates
- 10 Generalizing the Pattern-Based Approach
- 11 A Detour to Income Expectations
- 12 The Fisher Effect in Historical Times
- 13 Expectations of High Inflation
- 14 The Fisher Effect in Asian Economies
- 15 The Fisher Effect in African Economies
- 16 Estimates of Expected Inflation for Major Economies
- 17 Estimates of Expected Real Interest Rates for Major Economies
- Epilogue
- References
- Index
8 - Inflation Dynamics
Published online by Cambridge University Press: 24 July 2020
Book contents
- The Behavioral Economics of Inflation Expectations
- The Behavioral Economics of Inflation Expectations
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Preface
- 1 Patterns and Expectations
- 2 Extrapolation and Expectations
- 3 Eliciting Expectations under Laboratory Conditions
- 4 Features of the Laboratory Data
- 5 Similarity Matching and Scaling the Experimental Data
- 6 Pattern Extrapolation and Expectations Measured by Consumer Surveys
- 7 Heterogeneity and Uncertainty of Inflation Expectations
- 8 Inflation Dynamics
- 9 Explaining the Course of Interest Rates
- 10 Generalizing the Pattern-Based Approach
- 11 A Detour to Income Expectations
- 12 The Fisher Effect in Historical Times
- 13 Expectations of High Inflation
- 14 The Fisher Effect in Asian Economies
- 15 The Fisher Effect in African Economies
- 16 Estimates of Expected Inflation for Major Economies
- 17 Estimates of Expected Real Interest Rates for Major Economies
- Epilogue
- References
- Index
Summary
In this chapter, we use the measure of pattern-based expectations in an econometric investigation of inflation. It is well known that expected inflation itself is an important driver of inflation. Older accounts see the inflationary expectations of workers as the central variable that explains why expectations affect the course of the aggregate price level. In more recent contributions, decision-making of firms takes central stage. The expectation of producers regarding the future course of the price level is seen as an important element in firms’ price setting.1 The empirical study here follows this newer approach.
- Type
- Chapter
- Information
- The Behavioral Economics of Inflation ExpectationsMacroeconomics Meets Psychology, pp. 85 - 93Publisher: Cambridge University PressPrint publication year: 2020