The Long-term Effects of Inflation on Inflation Expectations

Fabio Braggion, Felix von Meyerinck, Nic Schaub and Michael Weber

No 32160, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the long-term effects of inflation surges on inflation expectations. German households living in areas with higher local inflation during the hyperinflation of the 1920s expect higher inflation today, after partialling out determinants of historical inflation and current inflation expectations . Our evidence points towards transmission of inflation experiences from parents to children and through collective memory. Differential historical inflation also modulates the updating of expectations to current inflation, the response to economic policies affecting inflation, and financial decisions. We obtain similar results for Polish households residing in formerly German areas. Overall, our findings are consistent with inflationary shocks having a long-lasting impact on attitudes towards inflation.

JEL-codes: D14 E31 E71 G41 N14 (search for similar items in EconPapers)
Date: 2024-02
New Economics Papers: this item is included in nep-his, nep-inv and nep-mon
Note: AG AP CF ME
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Related works:
Working Paper: The Long-Term Effects of Inflation on Inflation Expectations (2025)
Working Paper: The Long-term Effects of Inflation on Inflation Expectations (2024)
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