Conference Agenda

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Session Overview
Session
Track T6-2: Treasury Markets, Inflation and Taxes
Time:
Tuesday, 21/May/2024:
9:30am - 10:15am

Session Chair: Marco Grotteria, London Business School
Discussant: Spencer Kwon, Brown University
 Location: Room 501

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Presentations

The Long-Term Effects of Inflation on Inflation Expectations

Fabio Braggion1, Felix von Meyerinck2, Nic Schaub3, Michael Weber4

1University of Tilburg; 2University of Zurich; 3WHU -- Otto Beisheim School of Management; 4University of Chicago Booth

We study the long-term effects of inflation surges on inflation expectations. German households living in areas with higher local inflation during the hyperinflation of the 1920s expect higher inflation today, after partialling out determinants of historical inflation and current inflation expectations. Our evidence points towards transmission of inflation experiences from parents to children and through collective memory. Differential historical inflation also modulates the updating of expectations to current inflation, the response to economic policies affecting inflation, and financial decisions. We obtain similar results for Polish households residing in formerly German areas. Overall, our findings are consistent with inflationary shocks having a long-lasting impact on attitudes towards inflation.


Braggion-The Long-Term Effects of Inflation on Inflation Expectations-578.pdf