Inflation Expectations and How it Explains the Inflationary Impact of Oil Price Shocks: Evidence from the Michigan Survey

Benjamin Wong

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Analysis of the Michigan Survey data confirms U.S. inflation expectations are not perfectly anchored in the event of an oil price shock. Two key results emerge through counterfactual analysis. First, better anchoring of inflation expectations can ameliorate the mild inflation impact which occurs 10 to 12 months after an oil price shock. Second, an initial large burst of inflation from an oil price shock always occurs regardless whether inflation expectations are anchored or not. Therefore, while better anchoring of inflation expectations can lead to better inflation outcomes, these gains can be limited.

Keywords: Oil price shocks; Michigan Survey; Inflation expectations (search for similar items in EconPapers)
JEL-codes: C32 D84 E31 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2014-06
New Economics Papers: this item is included in nep-ene, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Do Inflation Expectations Propagate the Inflationary Impact of Real Oil Price Shocks?: Evidence from the Michigan Survey (2015)
Working Paper: Do inflation expectations propagate the inflationary impact of real oil price shocks?: Evidence from the Michigan survey (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2014-45

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