Partisan expectations and COVID-era inflation

• 成果类型: Article
• 署名作者: Binder, Carola Conces; Kamdar, Rupal; Ryngaert, Jane M.
• 署名单位: University of Texas System; University of Texas Austin; Indiana University System; Indiana University Bloomington; University of Notre Dame
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2024.103649
• 发表日期: 2024
• 关键词: Inflation expectations; Anchoring; Macroeconomic data releases; Regional Phillips curve

摘要

We document that, during the COVID-19 era, the inflation expectations of Democrats remained strongly anchored, while those of Republicans did not. Republicans' expectations not only rose well above the inflation target, but also became more sensitive to a variety of shocks, including CPI releases and energy prices. We then exploit geographic variation in political affiliation at the MSA level to show that the partial de-anchoring of expectations had implications for realized inflation. Counterfactual exercises imply that, had all expectations become as unanchored as those of Republicans, average inflation would have been two to four percentage points higher for much of the pandemic period, ceteris paribus.