Inflation Expectations: Review and Evidence

63 Pages Posted: 27 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

Graduate Institute of International and Development Studies (IHEID) - Department of Economics

Dana Vorisek

World Bank

Multiple version iconThere are 3 versions of this paper

Date Written: March 26, 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, inflation expectations, monetary policy, emerging markets, developing economies

JEL Classification: E31, E37, E40, E50

Suggested Citation

Kose, M. Ayhan and Matsuoka, Hideaki and Panizza, Ugo and Vorisek, Dana, Inflation Expectations: Review and Evidence (March 26, 2019). CAMA Working Paper No. 29/2019. Available at SSRN: https://ssrn.com/abstract=3360726 or http://dx.doi.org/10.2139/ssrn.3360726

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 Panizza

Graduate Institute of International and Development Studies (IHEID) - Department of Economics ( email )

Geneva Avenue de la Paix 11A
Geneva, 1202
Switzerland

Dana Vorisek

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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