Narratives on the causes of inflation in Germany: First results of a pilot study

Lisa Demgensky and Ulrich Fritsche

No 77, WiSo-HH Working Paper Series from University of Hamburg, Faculty of Business, Economics and Social Sciences, WISO Research Laboratory

Abstract: Since 2021, the inflation rate in Germany and the euro area has increased significantly. At the same time, there are increasing signs of ``de-anchoring'' of inflation expectations in Germany. This paper - building on the approach of Andre et al. (2022) - examines in a pilot study survey-based narratives for the rising inflation together with socio-economic factors. A mixed-methods approach is used to classify the narratives, with clustering based on statistical criteria. A regression analysis is used to examine the relationship between socio-economic factors and narratives on the one hand, and the relationship between narratives/clusters of narratives and a de-anchoring of inflation expectations on the other hand. We can associate certain narratives with socio-economic characteristics and political partisanship. Narrative complexity is a function of education and literacy. Narrative clusters correspond to certain milieus and dimensions of socio-economic stratification. Narratives of supply shortages and price gouging are positively correlated with anchored expectations; demand and government plus other narratives are negatively correlated with anchored expectations.

Keywords: Narratives; expectation formation; inflation; Germany (search for similar items in EconPapers)
JEL-codes: E31 E32 E71 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-eec and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:uhhwps:77

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