Inflation expectations proprieties during the war: The case of Ukraine

Szyszko Magdalena (), Rutkowska Aleksandra () and Motuzka Olena ()
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Szyszko Magdalena: WSB Merito University in Poznań, ul. Powstańców Wielkopolskich 5, 61-895, Poznań, Poland
Rutkowska Aleksandra: Poznań University of Economics and Business, al. Niepodległości 10, 61-875 Poznań, Poland
Motuzka Olena: National Academy of Statistics, Accounting and Audit, Pidhirna St, 1, Kyiv, Ukraine

Economics and Business Review, 2025, vol. 11, issue 1, 108-132

Abstract: This study compares consumer and professional inflation expectations in Ukraine before and during the Russian invasion of Ukraine. We apply entropy-based measures to tackle co-movements of expectations and macro variables (inflation, food inflation, exchange rate and production) and dynamic time warping to assess their forward and backward orientation. The pre-war sample spans from May 2019 to February 2022, and the war sample from March 2022 to December 2024. We expected to find differences between pre-war and wartime samples, as war constitutes a political shock with severe economic consequences. The study confirms the change of expectations: more substantial mutual information with past inflation in most cases, better alignment between professionals and consumers, and a change in the distances between expectations and past or future inflation. This is the first empirical study discussing Ukrainian economic agents’ expectations during the full-scale invasion. Its novel aspect also concerns the method applied—standard procedures cannot be used for this sample length.

Keywords: inflation expectations; mutual information; dynamic time warping; war (search for similar items in EconPapers)
JEL-codes: C65 D84 E50 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ecobur:v:11:y:2025:i:1:p:108-132:n:1003

DOI: 10.18559/ebr.2025.1.1813

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