News of disinflation and firms’ expectations: New causal evidence

Martin Caruso-Bloeck, Miguel Mello and Jorge Ponce

Journal of International Money and Finance, 2023, vol. 137, issue C

Abstract: We causally identify how firms’ inflation and growth expectations respond to information about a comprehensive reform in the monetary policy framework by means of a randomized control trial. The reform is intended to lower inflation significantly in the coming years, making this experiment unique relative to previous ones that are carried out in stable and consolidated monetary policy frameworks. Firms treated with information about the reform lower their inflation and cost expectations by about 0.5 percentage points, with the effect being persistent sixth months after the treatment. Treated firms also expect temporarily lower GDP growth.

Keywords: Inflation expectations; Economic expectations; Disinflation; Monetary policy communication; Randomized control trial; Firms’ survey (search for similar items in EconPapers)
JEL-codes: C23 E52 E58 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:137:y:2023:i:c:s0261560623001158

DOI: 10.1016/j.jimonfin.2023.102914

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