Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272733 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16106
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Using Italian data that includes both inflation forecasts of firms and external information on their balance sheets, we study the causal effect of changes in the dispersion of beliefs about future inflation on the misallocation of resources. We find that as disagreement increases, so does misallocation. In times of low inflation, the aggregate TFP loss of the dispersed expectations-induced misallocation is moderate, but we argue that it likely becomes quite significant in times of high inflation.
Subjects: 
misallocation
inflation expectations
JEL: 
E31
C83
D84
O47
Document Type: 
Working Paper

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