Ivan Yotzov (@iyotzov.bsky.social)

Check out our new @voxeu.org column which analyses how firm inflation perceptions/expectations respond to CPI inflation releases Firms respond to changes in CPI inflation, not news relative to professional forecasts. Full WP: www.nber.org/papers/w32731 cepr.org/voxeu/column...

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Inflation on Wall Street versus Main Street Since 2021, developed countries have experienced a significant inflation episode. This column uses Decision Maker Panel data from UK CEOs and CFOs to study firms’ inflation perceptions and expectations around monthly official inflation releases. Firms’ expectations are most responsive when inflation coverage in the media is elevated, suggesting salience is a key issue, as the media focuses attention on data releases. Furthermore, firms respond to changes in headline inflation rates and not to surprises relative to professional forecasts. The results highlight a distinction between financial markets (‘Wall Street’) and firms (‘Main Street’), which should inform modelling of economic behaviour. https://cepr.org/voxeu/columns/inflation-wall-street-versus-main-street