Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/240350
Authors: 
Stanisławska, Ewa
Paloviita, Maritta
Year of Publication: 
2021
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 10/2021
Abstract: 
Using the ECB Consumer Expectations Survey, this paper investigates how consumers revise medium-term inflation expectations. We provide robust evidence of their adjustment to the current economic developments. In particular, consumers adjust medium-term inflation views in response to changes in short-term inflation expectations and, to a lesser degree, to changes in perceptions of current inflation. We find that the strong adverse Covid-19 pandemic shock contributed to an increase in consumer inflation expectations. We show that consumers who declare high trust in the ECB adjust their medium-term inflation expectations to a lesser degree than consumers with low trust. Our results increase understanding of expectations formation, which is an important issue for medium-term oriented monetary policy.
Subjects: 
Inflation expectations
consumer survey
micro-data
JEL: 
D12
D84
E31
E58
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-380-5
Document Type: 
Working Paper

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