How to Limit the Spillover from the 2021 Inflation Surge to Inflation Expectations?

Last registered on January 24, 2022
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Pre-Trial

Trial Information

General Information

Title
How to Limit the Spillover from the 2021 Inflation Surge to Inflation Expectations?
RCT ID
AEARCTR-0008854
Initial registration date
January 21, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
January 24, 2022, 8:58 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Germany
Region

Primary Investigator

Name
Damjan Pfajfar
Affiliation
Federal Reserve Board
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Other Primary Investigator(s)

PI Name
Lena Dräger
PI Affiliation
Leibniz University Hannover
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PI Name
Michael J. Lamla
PI Affiliation
Leuphana University of Lüneburg and ETH Zurich, KOF Swiss Economic Institute
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Additional Trial Information

Status
Completed
Start date
2021-09-14
End date
2021-09-16
Keywords
Behavior
Additional Keywords
Short-run and long-run inflation expectations, inflation surge, randomized control trial, survey experiment, persistent or transitory inflation shock
JEL code(s)
E31, E52, E58, D84
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
By providing numerical inflation projections. Many central banks currently face inflation well above their targets and with that the challenge to prevent spillovers on inflation expectations. We study the effect of different communication about the 2021 inflation surge on German consumers' inflation expectations using a randomized control trial. We show that information about rising inflation increases short- and long-term inflation expectations. This initial increase in expectations can be mitigated using information about inflation projections, where numerical information about professional forecasters' projections seems to reduce inflation expectations by more than policymaker’s characterization of inflation as a temporary phenomenon.
External Link(s)

Registration Citation

Citation
Dräger, Lena, Michael J. Lamla and Damjan Pfajfar. 2022. "How to Limit the Spillover from the 2021 Inflation Surge to Inflation Expectations?." AEA RCT Registry. January 24. https://doi.org/10.1257/rct.8854-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2021-09-15
Intervention End Date
2021-09-16

Primary Outcomes

Primary Outcomes (end points)
Short- and long-run inflation expectations
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The randomized control trial in this study was conducted on respondents in the September 2021 wave of the Bundesbank Online Panel of Households (BOP-HH). The BOP-HH core questionnaire elicits a large range of both qualitative and quantitative macroeconomic expectations. For our study, we focus on point estimates of expected inflation 12 months ahead (short-run expectations) and expectations either 5 or 10 years ahead (long-run expectations). We elicit expectations before and after the information treatment.
Experimental Design Details
Randomization Method
Randomization done by a computer programmed by external contractor of the Deutche Bundesbank that conducted the survey.
Randomization Unit
individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
none
Sample size: planned number of observations
3,724 respondents to the survey (representative of German population)
Sample size (or number of clusters) by treatment arms
3,724 participants who were randomly selected into our five treatment arms, each consisting of about 650 respondents
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials