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dc.titleThe Expectations of Others
dc.contributor.authorGarcía-Lembergman, Ezequiel
dc.contributor.authorHajdini, Ina
dc.contributor.authorLeer, John
dc.contributor.authorPedemonte, Mathieu
dc.contributor.authorSchoenle, Raphael
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.date.available2024-10-10T00:10:00
dc.date.issue2024-10-10T00:10:00
dc.description.abstractUsing a novel dataset that integrates inflation expectations with information on social network connections, we show that inflation expectations within one's social network have a positive, causal relationship with individual inflation expectations. This relationship is stronger for groups that share common demographic characteristics such as gender, income, or political affiliation and when salient information disseminates through the network. In a monetary union New-Keynesian model, socially determined inflation expectations induce imperfect risk-sharing and can affect the inflation and real output propagation of local and aggregate shocks. To reduce welfare losses due to socially determined expectations, monetary policy should optimally put more weight on the inflation rate of socially more connected regions.
dc.format.extent89
dc.identifier.doihttp://dx.doi.org/10.18235/0013191
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/The-Expectations-of-Others.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectInflation
dc.subjectInflation Targeting
dc.subjectPopulation Statistic
dc.subjectSocial Network
dc.subjectIntegration and Trade
dc.subjectProductivity Shock
dc.subjectEconomy
dc.subjectDebtor Finance
dc.subjectMonetary Policy
dc.subjectRetail
dc.subject.jelcodeE31 - Price Level • Inflation • Deflation
dc.subject.jelcodeE71 - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy
dc.subject.jelcodeC83 - Survey Methods • Sampling Methods
dc.subject.keywordsInflation expectations;Social network;Monetary union
idb.identifier.pubnumberIDB-WP-01642
idb.operationRG-K1098
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