Trend Inflation and Inflation Compensation
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Summary:
This paper incorporates market-based inflation expectations to the growing literature on trend inflation estimation, and finds that there has been a significant decline in euro area trend inflation since 2013. This finding is robust to using different measures of long-term inflation expectations in the estimation, both market-based and surveys. That evidence: (i) supports the expansion of ECB’s UMP measures since 2015; (ii) provides a metric to monitor long-term inflation expectations following their introduction, and the likelihood of a sustained return of inflation towards levels below, but close to, 2% over the medium term
Series:
Working Paper No. 2018/154
Subject:
Financial crises Global financial crisis of 2008-2009 Inflation Inflation persistence National accounts Prices Return on investment
English
Publication Date:
July 6, 2018
ISBN/ISSN:
9781484362402/1018-5941
Stock No:
WPIEA2018154
Pages:
45
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