Publication details
Understanding Inflation Expectations: Data, Drivers and Policy Implications
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| Year of publication | 2024 |
| Citation | |
| Description | We investigate inflation expectations and their measures in the context of the 2022 inflation surge in the Czech Republic. Using data and econometric analyses, we explore how inflation expectations are formed and how they may affect inflation developments. To capture the overall trend of inflation expectations in the Czech economy, we develop a Common Inflation Expectations index. Additionally, we extend the CNB’s g3+ core projection model by incorporating endogenous expectation premiums that reflect elevated inflation expectations. Utilizing the Common Inflation Expectations index and the modified model, we construct a simulation that provides policyrelevant outcomes when addressing high inflation. By presenting the simulation, we emphasize the importance and relevance of our research for practical policymaking. |