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Anchored or de-anchored? That is the question
Institution:1. Department of Economics, U.S. Naval Academy, USA;2. FAME|GRAPE, ul. Mazowiecka 11/14, 00-052, Warsaw, Poland;1. University of Valencia, ERI-CES, Spain;2. Faculty of Economics, Avda. dels Tarongers, s/n, 46022, Valencia, Spain;1. University of Louisiana at Lafayette, USA;2. University of Arkansas at Little Rock, USA;1. Indian Institute of Foreign Trade, Kolkata, India;2. Centre for Training and Research in Public Finance and Policy (CSSSC), Calcutta, India;3. CES–ifo, Munich, Germany;4. GEP, Nottingham, UK;5. National Law University, Delhi, India;6. Indian Statistical Institute, Kolkata, India;1. Department of Economics and Law, Korea Military Academy, 574 Hwarang-ro, Seoul, Republic of Korea;2. School of Economic, Political & Policy Science, University of Texas at Dallas, 800 W. Campbell Rd., Richardson, TX, 75080, USA
Abstract:Using a variety of approaches, this paper shows that long-term inflation expectations have de-anchored from the ECB’s inflation aim. The long-term expectations reported in the ECB Survey of Professional Forecasters have not regained the levels that prevailed before the 2013-14 disinflation. Long-term expectations have also become sensitive to short-term expectations and to negative surprises to inflation. Forecasters who participated in most of the survey rounds were highly sensitive to short-term developments in inflation.
Keywords:Survey data  Professional forecasters  Inflation expectations  Anchoring  Monetary policy  E31  E52  E58
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