European Union consumer inflation expectations in macro panels

Andrius Vainilavicius
Additional contact information
Andrius Vainilavicius: Vilnius University, Latvia

Review of Socio - Economic Perspectives, 2025, vol. 10, issue 1, 65-77

Abstract: Paper investigates the role of consumer inflation expectations in macroeconomic variable dynamics within select European Union countries from 2004Q1 to 2024Q3, employing a panel vector autoregression (PVAR) model. The empirical analysis compares two approaches: balance statistics and various configurations of the Carlson-Parkin quantification method, studying variations in inferred dynamics dependent upon methodological selection. The results indicate that consumer inflation expectations modestly influence aggregate demand and inflation, consistent with intertemporal substitution effects. However, the anticipated wage-price spiral was largely absent, and the relationship between unemployment and inflation was weaker than traditional Phillips curve frameworkswould predict, suggesting structural factors or unemployment rates above the natural unemployment rate. Furthermore, macroeconomic relationships found, particularly concerning consumer sentiment are dependent on methodological choices. Lastly, heterogeneity in dynamics between different countries is analysed. This heterogeneity underscores the value of country-specific analysis for understanding the transmission of inflation expectations to macroeconomic outcomes.

Keywords: Consumer inflation expectations; balance statistics; Carlson-Parkin method; survey data. (search for similar items in EconPapers)
JEL-codes: C49 D84 E58 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://reviewsep.com/index.php/rsep/article/view/248/351 (application/pdf)
https://reviewsep.com/index.php/rsep (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aly:journl:202353

DOI: 10.2478/rsep-2025-0006

Access Statistics for this article

Review of Socio - Economic Perspectives is currently edited by Veysel KAYA

More articles in Review of Socio - Economic Perspectives from Reviewsep
Bibliographic data for series maintained by Veysel KAYA ().