Carola Binder on the Importance of Inflation Expectations and How Policymakers Should Respond
Macro Musings with David Beckworth
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Can the Central Bank Really Change Inflation Expectations?
There are a lot of studies along these ines that try to answer the question of, ok, if somebody's inflation expectations change, how does that change their behavior? This literature really started exploding during the great recession. When you get to the zero lower bound, than the central bank can longer just change nominal interest rates as it's like policy lever. So instead, if it wants to try to stimulate the economy, one possible route that it can go is trying to change inflation expectations.
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