Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/180304
Authors: 
Dräger, Lena
Lamla, Michael
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper 7042
Abstract: 
In this paper, we explore the degree of anchoring of consumers’ individual long-run inflation expectations utilizing the University of Michigan Survey of Consumer’s rotating panel micro-structure. Our results indicate that long-run inflation expectations became more anchored over the last decades, as the degree of co-movement between short- and long-run expectations fell significantly. While we observe that the anchoring of expectations increases for all age and birth cohorts, it seems that older cohorts, who experienced the high inflation period of the 1970s, remain less anchored in their long-run inflation expectations as compared to the young cohorts. Older cohorts show a higher volatility in their degree of anchoring and react more to adverse news shocks. This alludes to potentially long-lasting costs of high inflation spells.
Subjects: 
anchoring
inflation expectations
micro data
birth cohort effects
news
JEL: 
E31
E52
E58
D84
C25
Document Type: 
Working Paper

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