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Damjan Pfajfar (Federal Reserve) speaks at the ESM

12. Dec. 2019, 14:00 - 12. Dec. 2019, 15:30
ESM premises


"Inflation and Deflationary Biases in Inflation Expectations"

We explore the consequences of losing confidence in the price-stability objective of central banks by quantifying the inflation and deflationary biases in inflation expectations. In a model with an occasionally binding zero-lower-bound constraint, we show that an inflation bias as well as a deflationary bias exist as a steady-state outcome. We assess the predictions of this model using unique individual-level inflation expectations data across nine countries that allow for a direct identification of these biases. Both inflation and deflationary biases are present (and sizable) in inflation expectations of these individuals. Among the euro-area countries in our sample, we can document significant differences in perceptions of the European Central Bank’s objectives, despite having a common monetary policy.

Damjan Pfajfar
Damjan Pfajfar

Damjan Pfajfar is a Principal Economist, Board of Governors of the Federal Reserve System.

This is an ESM research internal seminar. If you would like to attend, please write an email to (link sends e-mail).

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