Inflationary household uncertainty shocks

Gene Ambrocio

No 5/2022, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: I construct a novel measure of household uncertainty based on survey data for European countries. I show that household uncertainty shocks do not universally behave like negative demand shocks. Notably, household uncertainty shocks are largely inflationary in Europe. Further analysis, including a comparison of results across countries, suggest that factors related to average markups along with monetary policy play a role in the transmission of household uncertainty to inflation. These results lend support to a pricing bias mechanism as an important transmission channel.

Keywords: uncertainty; inflation; surveys of expectations (search for similar items in EconPapers)
JEL-codes: D84 E30 E52 E71 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-eec and nep-mon
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https://www.econstor.eu/bitstream/10419/251465/1/BoF-DP-2205.pdf (application/pdf)

Related works:
Working Paper: Inflationary household uncertainty shocks (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2022_005

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