The Speed of Firm Response to Inflation

Ivan Yotzov, Nicholas Bloom, Philip Bunn, Paul Mizen and Gregory Thwaites

No 32731, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyses the response of UK firms to monthly CPI inflation releases using high-frequency data from a large business survey. Firms’ inflation perceptions and expectations respond within hours of new inflation data releases. Firm expectations are most responsive when inflation coverage in the media is elevated, suggesting a key role for the media in focusing attention on data releases. Furthermore, firms respond to changes in inflation data, but not to surprises relative to professional forecasts. This highlights a distinction between “Wall Street”, where financial markets respond to inflation surprises, and “Main Street”, where firms respond to media inflation headlines.

JEL-codes: C83 D22 D84 E31 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-inv and nep-mon
Note: ME
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Related works:
Working Paper: The speed of firm response to inflation (2024)
Working Paper: The Speed of Firm Response to Inflation (2024)
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