Echoes of Hyperinflation: The Link Between past Exposure and Formation of Expectations

Yusuf Emre Akgunduz (), Seyit Cilasun (), Ahmet Deryol () and Semih Tumen ()
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Yusuf Emre Akgunduz: Central Bank of the Republic of Turkiye
Ahmet Deryol: Central Bank of the Republic of Turkiye
Semih Tumen: Amazon

No 18543, IZA Discussion Papers from IZA Network @ LISER

Abstract: This paper studies how lifetime inflation exposure shapes individuals' inflation expectations, perceptions, and financial behavior. Using a large individual-level dataset from Türkiye spanning 2014 to 2024, combined with detailed measures of past inflation experiences, we show that individuals who have lived through higher inflation consistently report higher expected and perceived inflation. They also respond more strongly to current inflation conditions. The effects are larger for less educated and lower income individuals. In additional analysis, we find that greater lifetime inflation exposure is associated with higher use of retail loans, especially fixed rate loans. These results highlight the persistent influence of past economic conditions on expectation formation and household decisions in an emerging economy with a history of volatile inflation.

Keywords: inflation expectations; lifetime exposure; households (search for similar items in EconPapers)
JEL-codes: D12 D84 D91 E03 E31 H31 (search for similar items in EconPapers)
Date: 2026-04
New Economics Papers: this item is included in nep-ara and nep-mon
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