Research on Monday Rotterdam

Speaker(s)
Olivier Coibion (University of Texas at Austin, United States)
Date
Monday, 28 May 2018
Time
12:00-13:15
Venue
Erasmus University Rotterdam, Burg. Oudlaan 50, Tinbergen building, room H09-02RotterdamNetherlands
Contact person(s)
Agnieszka Markiewicz

Abstract:

We use a unique design feature of a survey of Italian firms to study the causal effect of inflation expectations on firms’ economic decisions. In the survey, a randomly chosen subset of firms is repeatedly treated with information about recent inflation (or the ECB’s inflation target) whereas other firms are not. This information treatment generates exogenous variation in inflation expectations. We find that higher inflation expectations on the part of firms leads them to raise their prices and reduce their employment.