Why Do We Think That Inflation Expectations Matter for Inflation? (And Should We?)

Jeremy B. Rudd
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Jeremy B. Rudd: https://www.federalreserve.gov/econres/jeremy-rudd.htm

No 2021-062, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Economists and economic policymakers believe that households' and firms' expectations of future inflation are a key determinant of actual inflation. A review of the relevant theoretical and empirical literature suggests that this belief rests on extremely shaky foundations, and a case is made that adhering to it uncritically could easily lead to serious policy errors.

Keywords: Phillips curve; Expectations; Inflation; Wage determination; Wage-price spiral (search for similar items in EconPapers)
JEL-codes: E31 E52 (search for similar items in EconPapers)
Pages: 27 p.
Date: 2021-09-24
New Economics Papers: this item is included in nep-cba, nep-cwa, nep-hpe, nep-mac and nep-mon
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2021-62

DOI: 10.17016/FEDS.2021.062

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