What matters in households’ inflation expectations?

Philippe Andrade, Erwan Gautier and Eric Mengus

Journal of Monetary Economics, 2023, vol. 138, issue C, 50-68

Abstract: Using survey data on French households over the 2004–2018 period, we provide new evidence on the role of households’ inflation expectations for durable spending decisions. A large share of households expects prices to remain stable instead of increasing. This share accounts for 75% of fluctuations in the average inflation expectation. Households expecting stable prices have a lower propensity to buy durable goods than those expecting positive inflation. In contrast, differences across households expecting positive inflation are associated with insignificant differences in durable consumption decisions. We discuss some policy implications.

Keywords: Inflation expectation channel; Household spending; Household surveys; Stabilization policies (search for similar items in EconPapers)
JEL-codes: D12 D83 E21 E31 E52 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: What Matters in Households' Inflation Expectations? (2021)
Working Paper: What Matters in Households’ Inflation Expectations? (2020)
Working Paper: What Matters in Households' Inflation Expectations? (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:138:y:2023:i:c:p:50-68

DOI: 10.1016/j.jmoneco.2023.05.007

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