Inflation Expectations: Review and Evidence

63 Pages Posted: 26 Mar 2019

See all articles by M. Ayhan Kose

M. Ayhan Kose

Development Prospects Group at the World Bank

Hideaki Matsuoka

World Bank

Ugo Panizza

United Nations - Conference on Trade and Development (UNCTAD); Graduate Institute of International and Development Studies (IHEID)

Dana Vorisek

World Bank

Multiple version iconThere are 3 versions of this paper

Date Written: March 20, 2019

Abstract

This paper presents a comprehensive examination of the determination and evolution of inflation expectations, with a focus on emerging market and developing economies (EMDEs). The results suggest that long-term inflation expectations in EMDEs are not as well anchored as those in advanced economies, despite notable improvements over the past two decades. Indeed, in EMDEs, long-term inflation expectations are more sensitive to both domestic and global inflation shocks. However, EMDEs tend to be more successful in anchoring inflation expectations in the presence of an inflation targeting regime, high central bank transparency, strong trade integration, and a low level of public debt.

Keywords: Inflation, Macroeconomic Management, Financial Structures, International Trade and Trade Rules, Public Sector Economics, Public Finance Decentralization and Poverty Reduction, Economic Adjustment and Lending, Macro-Fiscal Policy

Suggested Citation

Kose, M. Ayhan and Matsuoka, Hideaki and Panizza, Ugo G. and Vorisek, Dana, Inflation Expectations: Review and Evidence (March 20, 2019). World Bank Policy Research Working Paper No. 8785. Available at SSRN: https://ssrn.com/abstract=3360143

M. Ayhan Kose (Contact Author)

Development Prospects Group at the World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Hideaki Matsuoka

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Ugo G. Panizza

United Nations - Conference on Trade and Development (UNCTAD) ( email )

Palais des Nations
Office E 8074
Geneva, 1211
Switzerland

Graduate Institute of International and Development Studies (IHEID) ( email )

PO Box 136
Geneva, CH-1211
Switzerland

Dana Vorisek

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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