Inflation Expectations and Monetary Policy in Europe

We use monthly data across fifteen euro-area economies for the period 1985:1-2015:3 to obtain different monetary policy shocks pertaining to more versus less informed individuals. We then investigate how these affect inflation expectations of different types of consumers before and after the incidence of the recent Crisis. Shocks obtained based on the assumption that individuals are well informed can have different impact on inflation expectations as compared to shocks obtained based on the assumption that they are not as informed. Moreover, monetary policy can have different effects on inflation expectations for different types of consumers. Finally, monetary policy has different effects on inflation expectations after as compared to before the incidence of the recent Crisis.

Keywords: Inflation expectations, monetary policy, shocks, Crisis

JEL Classification: E31, E52, F41

Suggested Citation: Suggested Citation

Andreou, Elena and Eminidou, Snezana and Eminidou, Snezana and Zachariadis, Marios, Inflation Expectations and Monetary Policy in Europe (May 20, 2016). CEPR Discussion Paper 11306, Available at SSRN: https://ssrn.com/abstract=2790743 or http://dx.doi.org/10.2139/ssrn.2790743