Anchoring Households’ Inflation Expectations when Inflation is High

Giang Nghiem, Lena Dräger and Ami Dalloul

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

Abstract: This paper explores communication strategies for anchoring households’ medium-term inflation expectations in a high inflation environment. We conducted a survey experiment with a representative sample of 4,000 German households at the height of the recent inflation surge in early 2023, with information treatments including a qualitative statement by the ECB president and quantitative information about the ECB’s inflation target or projected inflation. Inflation projections are most effective, but combining information about the target with a qualitative statement also significantly improves anchoring. The treatment effects are particularly pronounced among respondents with high financial literacy and high trust in the central bank.

Keywords: anchoring of inflation expectations; central bank communication; survey experiment; randomized controlled trial (RCT) (search for similar items in EconPapers)
JEL-codes: D84 E31 E52 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2024-12
New Economics Papers: this item is included in nep-eec, nep-exp, nep-fle and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2024-70

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