The Subjective Inflation Expectations of Households and Firms: Measurement, Determinants, and Implications

38 Pages Posted: 18 May 2022

See all articles by Michael Weber

Michael Weber

University of Chicago - Finance; National Bureau of Economic Research (NBER)

Francesco D'Acunto

Georgetown University

Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Olivier Coibion

University of Texas at Austin

Multiple version iconThere are 4 versions of this paper

Date Written: May 16, 2022

Abstract

Households’ and firms’ subjective inflation expectations play a central role in macroeconomic and intertemporal microeconomic models. We discuss how subjective inflation expectations are measured, the patterns they display, their determinants, and how they shape households’ and firms’ economic choices in the data and help us make sense of the observed heterogeneous reactions to business-cycle shocks and policy interventions. We conclude by highlighting the relevant open questions and why tackling them is important for academic research and policy making.

JEL Classification: D1,D2,D8,D9,E2,E3,E4,E5,E7,J1

Suggested Citation

Weber, Michael and D'Acunto, Francesco and Gorodnichenko, Yuriy and Coibion, Olivier, The Subjective Inflation Expectations of Households and Firms: Measurement, Determinants, and Implications (May 16, 2022). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2022-64, Available at SSRN: https://ssrn.com/abstract=4113387 or http://dx.doi.org/10.2139/ssrn.4113387

Michael Weber (Contact Author)

University of Chicago - Finance ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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Francesco D'Acunto

Georgetown University ( email )

Washington, DC 20057
United States

Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

HOME PAGE: http://www.econ.berkeley.edu/~ygorodni/index.htm

National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Bonn, D-53072
Germany

Olivier Coibion

University of Texas at Austin ( email )

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Austin, TX 78712
United States

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