Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/249865 
Year of Publication: 
2021
Series/Report no.: 
ECONtribute Discussion Paper No. 127
Publisher: 
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI), Bonn and Cologne
Abstract: 
We provide evidence on the stories that people tell to explain a historically notable rise in inflation using samples of experts, U.S. households, and managers. We document substantial heterogeneity in narratives about the drivers of higher inflation rates. Experts put more emphasis on demand-side factors, such as fiscal and monetary policy, and on supply chain disruptions. Other supply-side factors, such as labor shortages or increased energy costs, are equally prominent across samples. Households and managers are more likely to tell generic stories related to the pandemic or mismanagement by the government. We also find that households and managers expect the increase in inflation to be more persistent than experts. Moreover, narratives about the drivers of the inflation increase are strongly correlated with beliefs about its persistence. Our findings have implications for understanding macroeconomic expectation formation.
Subjects: 
Narratives
Inflation
Beliefs
Macroeconomics
Fiscal Policy
Monetary Policy
JEL: 
D83
D84
E31
E52
E71
Document Type: 
Working Paper

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