Political shocks and inflation expectations: Evidence from the 2022 Russian invasion of Ukraine

Lena Dräger, Klaus Gründler and Niklas Potrafke

Journal of International Economics, 2025, vol. 153, issue C

Abstract: How do global supply-side shocks influence macroeconomic expectations? We exploit the 2022 Russian invasion of Ukraine as a natural experiment to identify the effect of a global political shock, which translated into a momentous supply-side shock, on inflation expectations. Collecting a unique survey among tenured economics professors in Germany, we find sizable effects on inflation expectations and monetary policy recommendations. A comparison with a representative sample of households shows that experts’ expectations adjust faster and to a larger degree to the shock. Text analyses on open-ended questions reveal that the effects are caused by supply-side models underlying experts’ formation of expectations.

Keywords: Inflation expectations; Supply-side shock; Belief formation; Natural experiment; 2022 Russian invasion of Ukraine; Survey; Economic experts (search for similar items in EconPapers)
JEL-codes: D74 D84 E31 E71 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Political Shocks and Inflation Expectations: Evidence from the 2022 Russian Invasion of Ukraine (2023)
Working Paper: Political Shocks and Inflation Expectations: Evidence from the 2022 Russian Invasion of Ukraine (2022)
Working Paper: Political Shocks and Inflation Expectations: Evidence from the 2022 Russian Invasion of Ukraine (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:153:y:2025:i:c:s0022199624001569

DOI: 10.1016/j.jinteco.2024.104029

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