Expectation formation in a new environment: Evidence from the German reunification

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Expectation formation in a new environment : Evidence from the German reunification. / Goldfayn-Frank, Olga; Wohlfart, Johannes.

I: Journal of Monetary Economics, Bind 115, 2020, s. 301-320.

Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt

Harvard

Goldfayn-Frank, O & Wohlfart, J 2020, 'Expectation formation in a new environment: Evidence from the German reunification', Journal of Monetary Economics, bind 115, s. 301-320. https://doi.org/10.1016/j.jmoneco.2019.08.001

APA

Goldfayn-Frank, O., & Wohlfart, J. (2020). Expectation formation in a new environment: Evidence from the German reunification. Journal of Monetary Economics, 115, 301-320. https://doi.org/10.1016/j.jmoneco.2019.08.001

Vancouver

Goldfayn-Frank O, Wohlfart J. Expectation formation in a new environment: Evidence from the German reunification. Journal of Monetary Economics. 2020;115:301-320. https://doi.org/10.1016/j.jmoneco.2019.08.001

Author

Goldfayn-Frank, Olga ; Wohlfart, Johannes. / Expectation formation in a new environment : Evidence from the German reunification. I: Journal of Monetary Economics. 2020 ; Bind 115. s. 301-320.

Bibtex

@article{4e2969d26a5d45488cc1643becf8f8e8,
title = "Expectation formation in a new environment: Evidence from the German reunification",
abstract = "Exploiting the German reunification, we study how households adapt to a new environment in their macroeconomic forecasting. East Germans expect higher inflation than West Germans decades after reunification. These differences are likely driven by the persistent effect of the inflation shock after reunification, which contrasted strongly with experiences of zero inflation in the GDR. East Germans{\textquoteright} higher inflation expectations are reflected in higher consumer debt and lower bond holdings. Our findings suggest that large changes in the environment can permanently impede people's ability to form expectations, with an important role for the interaction of experiences before and after the event.",
keywords = "Expectation formation, German reunification, Inflation, Macroeconomic experiences, Natural experiment",
author = "Olga Goldfayn-Frank and Johannes Wohlfart",
year = "2020",
doi = "10.1016/j.jmoneco.2019.08.001",
language = "English",
volume = "115",
pages = "301--320",
journal = "Journal of Monetary Economics",
issn = "0304-3932",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Expectation formation in a new environment

T2 - Evidence from the German reunification

AU - Goldfayn-Frank, Olga

AU - Wohlfart, Johannes

PY - 2020

Y1 - 2020

N2 - Exploiting the German reunification, we study how households adapt to a new environment in their macroeconomic forecasting. East Germans expect higher inflation than West Germans decades after reunification. These differences are likely driven by the persistent effect of the inflation shock after reunification, which contrasted strongly with experiences of zero inflation in the GDR. East Germans’ higher inflation expectations are reflected in higher consumer debt and lower bond holdings. Our findings suggest that large changes in the environment can permanently impede people's ability to form expectations, with an important role for the interaction of experiences before and after the event.

AB - Exploiting the German reunification, we study how households adapt to a new environment in their macroeconomic forecasting. East Germans expect higher inflation than West Germans decades after reunification. These differences are likely driven by the persistent effect of the inflation shock after reunification, which contrasted strongly with experiences of zero inflation in the GDR. East Germans’ higher inflation expectations are reflected in higher consumer debt and lower bond holdings. Our findings suggest that large changes in the environment can permanently impede people's ability to form expectations, with an important role for the interaction of experiences before and after the event.

KW - Expectation formation

KW - German reunification

KW - Inflation

KW - Macroeconomic experiences

KW - Natural experiment

U2 - 10.1016/j.jmoneco.2019.08.001

DO - 10.1016/j.jmoneco.2019.08.001

M3 - Journal article

AN - SCOPUS:85070889065

VL - 115

SP - 301

EP - 320

JO - Journal of Monetary Economics

JF - Journal of Monetary Economics

SN - 0304-3932

ER -

ID: 231945918