Lifetime Memories of Inflation: Evidence from Surveys and the Lab / Isabelle Salle, Yuriy Gorodnichenko, Olivier Coibion.

Format:

Book

Author/Creator:

Salle, Isabelle.

Contributor:

National Bureau of Economic Research.

Gorodnichenko, Yuriy.

Coibion, Olivier.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31996.

NBER working paper series no. w31996

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

We study how individuals' memories of inflation shape their expectations about future inflation using both surveys and laboratory experiments. Recalling having lived through prior disinflations has pronounced effects on how long-lived people expect the current inflation episode to last. Information treatments in which we show people prior disinflationary experiences similarly strongly reduce inflation expectations of individuals on average and are often recalled as inflation memories months later. We also show that when people try to forecast inflation in the lab, the inflation dynamics in the game can affect their beliefs much like the inflation experienced in real life. Methodologically, we compare and contrast surveys and lab experiments and discuss the pros and cons of each method, emphasizing the general consistency across the two methodologies.

Notes:

Print version record

December 2023.