The role of financial literacy in shaping inflation beliefs: The case of Ukraine

Andriy Tsapin and Oleksandr Faryna

Central Bank Review, 2025, vol. 25, issue supplement

Abstract: This paper investigates how households’ financial literacy influences their perceptions of past inflation and expectations of future price changes. Using novel survey data collected in Ukraine, we employ instrumental variable quantile regression models across various household subsamples to assess the asymmetric and heterogeneous effects of financial literacy on inflation-related beliefs. We find that the impact of financial literacy varies significantly across the distributions of inflation perceptions and expectations, shaped by distinct components – knowledge, behavior, and attitude – as well as by household characteristics such as size, income level, and place of residence. We also find that trust in the banking system enhances the accuracy of inflation beliefs, with a stronger effect as perceptions and expectations deviate from benchmarks. These findings have important implications for central banks seeking to anchor inflation expectations.

Keywords: Inflation expectations; Inflation perceptions; Financial literacy; Monetary policy (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.sciencedirect.com/science/article/pii/S1303070125000368 (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:tcb:cebare:v:25:y:2025:i:supplement:article:100225

Access Statistics for this article

More articles in Central Bank Review from Research and Monetary Policy Department, Central Bank of the Republic of Turkey Contact information at EDIRC.
Bibliographic data for series maintained by () and () and () and ().