Behavioural Macroeconomics: Unveiling the Psychology of Inflation Expectations

Eva Sirakovova

Public Finance Quarterly, 2024, vol. 70, issue 2, 90-105

Abstract: This article delves into the exploration of intersections between behavioural economics and macroeconomics, focusing on the psychology of inflation expectations. We present a critique of the Rational Expectations Hypothesis (REH) and propose perspectives from the standpoint of behavioural macroeconomics. In the empirical section, we examine the relationship between the evolution of inflation expectations and real inflation, revealing distinct patterns in the expected inflation distribution among the observed countries—the European Union and the United States. The article also addresses procedural rationality, emphasizing the role of recent observations in shaping inflation expectations. Additionally, it focuses on understanding the principles of behavioural macroeconomics in policy formulation, placing emphasis on adaptive rationality and intelligent decisionmaking. The integration of psychology into macroeconomics may offer a more realistic understanding of the development of inflation expectations, signifying a potential new era in economic modelling.

Keywords: behavioural macroeconomics; the psychology of inflation; inflation expectations; macroeconomics; inflation (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://unipub.lib.uni-corvinus.hu/10187/ (application/pdf)

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:pfq:journl:v:70:y:2024:i:2:p:90-105

DOI: 10.35551/PFQ_2024_2_4

Access Statistics for this article

More articles in Public Finance Quarterly from Corvinus University of Budapest Contact information at EDIRC.
Bibliographic data for series maintained by Adam Hoffmann ().