The Causal Effects of Inflation Expectations on Households' Beliefs and Actions

Olivier Coibion and Yuriy Gorodnichenko

RBA Annual Conference Papers from Reserve Bank of Australia

Abstract: We discuss how Randomized Control Trials (RCTs) can be used to study the causal effects of inflation expectations on the decisions of households. RCTs create exogenous variation in the inflation expectations of survey participants. When linked to either external information on their actions or subsequent survey waves that measure their ex-post decisions, this can provide clear causal identification of expectations on decisions. We review recent evidence using this strategy and discuss potential challenges associated with this approach.

Keywords: inflation expectations; surveys; consumption (search for similar items in EconPapers)
Date: 2024-10, Revised 2025-05
Note: Paper presented at the RBA's annual conference 'Central Bank Communications', Sydney, 14–15 October 2024.
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Persistent link: https://EconPapers.repec.org/RePEc:rba:rbaacp:acp2024-05

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