Politická ekonomie 2018, 66(6):751-775 | DOI: 10.18267/j.polek.1221

Stimuluje spotřebu v situaci nulové nominální úrokové míry zvýšení inflačních očekávání?

Pavel Potužák
Pavel Potužák (pavel.potuzak@vse.cz), Vysoká škola ekonomická v Praze, Národohospodářská fakulta

Does an Increase in Inflation Expectations Stimulate Consumption at the Zero Lower Bound?

In an effort to stimulate aggregate demand at the zero lower bound, economists and central bankers have focused on inflation expectations. The key argument is that an increase in inflation expectations may reduce the real interest rate and thus encourage consumption spending. This article examines not only the traditional channels of the fall in the interest rate connected to the relative importance of the substitution and income effects, but it also investigates the impact on the perceived real future labour income. It is shown that if people do not adjust their expectations about future nominal labour income when inflation their expectations rise, the effect on present consumption can be negative, and the aggregate demand might be reduced rather than increased. A graphical and mathematical analysis in the paper exposes the relative importance of traditional channels and this new channel. It is shown that the traditional perspective is only a special case of a more general approach.

Keywords: inflation expectations, zero lower bound, real interest rate, optimum consumption path
JEL classification: E21, E43, E52

Received: December 5, 2017; Accepted: June 5, 2018; Prepublished online: November 12, 2018; Published: December 1, 2018  Show citation

ACS AIP APA ASA Harvard Chicago IEEE ISO690 MLA NLM Turabian Vancouver
Potužák, P. (2018). Does an Increase in Inflation Expectations Stimulate Consumption at the Zero Lower Bound? Politická ekonomie, 66(6), 751-775. doi: 10.18267/j.polek.1221
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Bachmann, R., Berg, T. O., Sims, E. R. (2015). Inflation Expectations and Readiness to Spend: Cross-Sectional Evidence. American Economic Journal: Economic Policy, 7(1), 1-35, https://doi.org/10.1257/pol.20130292 Go to original source...
    2. Brůha, J., Tonner, J. (2017). An Exchange Rate Floor as an Instrument of Monetary Policy: An Ex-post Assessment of the Czech Experience. CNB. Working Paper Series No. 2017(4).
    3. Burke, M. A., Ozdagli, A. (2013). Household Inflation Expectations and Consumer Spending: Evidence from Panel Data. Federal Reserve Bank of Boston. No. 13-25.
    4. Campbell, J. Y., Mankiw, N. G. (1989). Consumption, Income and Interest Rates: Reinterpreting the Time Series Evidence. NBER Macroeconomics Annual, 1989(4), 185-246, https://doi.org/10.3386/w2924 Go to original source...
    5. ČNB (2013). Záznam z jednání bankovní rady ČNB ze dne 7. listopadu 2013. Česká národní banka.
    6. ČNB (2014). Sborník článků a rozhovorů k oslabení kurzu koruny. Česká národní banka.
    7. Eggertsson, G. B. (2011). What Fiscal Policy is Effective at Zero Interest Rates? NBER Macroeconomics Annual, 25(1), 59-112, https://doi.org/10.1086/657529 Go to original source...
    8. Eggertsson, G. B., Woodford, M. (2003). The Zero Bound on Interest Rates and Optimal Monetary Policy. Brookings Papers on Economic Activity, 1, 139-211, https://doi.org/10.7916/D8S46PV9 Go to original source...
    9. Fisher I. (1896). Appreciation and Interest. Publications of the American Economic Association, 11(4), 1-98.
    10. Fisher, I. (1930). Theory of Interest. New York: The Macmillan Company. ISBN 0879918640.
    11. Galí, J. (2008). Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework. New Jersey: Princeton University Press. ISBN 0691164789.
    12. Hall, R. E. (1978). Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence. Journal of Political Economy, 86(6), 971-987, https://doi.org/10.1086/260724 Go to original source...
    13. Hall, R. E. (1988). Intertemporal Substitution in Consumption. Journal of Political Economy, 96(2), 339-357, https://doi.org/10.1086/261539 Go to original source...
    14. Havránek, T., Horváth, R., Irsová, Z., Rusnák, M. (2015). Cross-country Heterogeneity in Intertemporal Substitution. Journal of International Economics, 96(1), 100-118, https://doi.org/10.1016/j.jinteco.2015.01.012 Go to original source...
    15. Hayek, F. A. von (1969). Three Elucidations of the Ricardo Effect. The Journal of Political Economy, 77(2), 274-285, https://doi.org/10.1086/259514 Go to original source...
    16. Holub, T., Franta, M., Král, P., Kubicová, I., Šmídková, K., Vašíček, B. (2014). The Exchange Rate as an Instrument at Zero Interest Rates: The Case of the Czech Republic. CNB Research and Policy Notes, 2014(3).
    17. Chiang, A. C., Miller, S. M. (1988). Inflation Expectations, Wealth Perception, and Consumption Expenditure. Eastern Economic Journal, 14(1), 27-38.
    18. Christiano, L. J., Eichenbaum, M., Evans, C. L. (2005). Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy. Journal of Political Economy, 113(1), 1-45, https://doi.org/10.1086/426038 Go to original source...
    19. Christiano, L., Eichenbaum, M., Rebelo, S. (2011). When Is the Government Spending Multiplier Large? Journal of Political Economy, 119(1), 78-121, https://doi.org/10.3386/w15394 Go to original source...
    20. Chytilová, H. (2017). Economic Literacy and Money Illusion: An Experimental Perspective. Routledge Advances in Experimental and Computable Economics (Book 9). Routledge. ISBN 1138235571.
    21. Ichiue, H., Nishiguchi, S. (2015). Inflation Expectations and Consumer Spending at the Zero Bound: Micro Evidence. Economic Inquiry, 53(2), 1086-1107, https://doi.org/10.1111/ecin.12176 Go to original source...
    22. IVK (2015). Spor o měnovou politiku v kontextu devizových intervencí. Praha: Institut Václava Klause. ISBN 978-80-878-0693-7.
    23. Jung, T., Teranishi, Y., Watanabe, T. (2005). Optimal Monetary Policy at the Zero-Interest-Rate Bound. Journal of Money, Credit and Banking, 37(5), 813-835, https://doi.org/10.1353/mcb.2005.0053 Go to original source...
    24. Keynes, J. M. (1936). The General Theory of Employment, Interest and Money. New York: Harcourt, Brace and Company. ISBN 0984061401.
    25. Krugman, P. R. (1998). It's Baaack: Japan's Slump and the Return of the Liquidity Trap. Brookings Papers on Economic Activity, The Brookings Institution, 29(2), 137-206, https://doi.org/10.2307/2534694 Go to original source...
    26. Mandel, M., Brůna, K. (2014). Ke sporu o depreciaci koruny a intervence ČNB. Bankovnictví, 13(1-2), 34-37.
    27. Mankiw, N. G. (1981). The Permanent Income Hypothesis and the Real Interest Rate. Economics Letters, 7(4), 307-311, https://doi.org/10.1016/0165-1765(81)90034-3 Go to original source...
    28. Mankiw, N. G., Romer, D. (eds.). (1991). New Keynesian Economics. Cambridge, MT: MIT Press. ISBN 9780262132664.
    29. McCallum, B. T. (2000). Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates. Journal of Money, Credit and Banking, 32(4), 870-904, https://doi.org/10.2307/2601148 Go to original source...
    30. Orphanides, A. (2004). Monetary Policy in Deflation: The Liquidity Trap in History and Practice. The North American Journal of Economics and Finance, 15(1), 101-124, https://doi.org/10.1016/j.najef.2003.12.001 Go to original source...
    31. Potužák, P. (2016). Fisher and Mises on Zero Interest: A Reconsideration. Prague Economic Papers, 25(2), 202-220, https://doi.org/10.18267/j.pep.555 Go to original source...
    32. Svensson, L. E. O. (2001). The Zero Bound in an Open Economy: A Foolproof Way of Escaping from a Liquidity Trap. Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, 19(S1), 277-312. Go to original source...
    33. Svensson, L. E. O. (2003). Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others. The Journal of Economic Perspectives, 17(4), 145-166, https://doi.org/10.1257/089533003772034934 Go to original source...
    34. Wiederholt, M. (2015). Empirical Properties of Inflation Expectations and the Zero Lower Bound. Working paper.
    35. Wolman, A. L. (2005). Real Implications of the Zero Bound on Nominal Interest Rates. Journal of Money, Credit and Banking, 37(2), 273-96, https://doi.org/10.1353/mcb.2005.0026 Go to original source...
    36. Woodford, M. (2003). Interest and Prices: Foundations of a Theory of Monetary Policy. New Jersey: Princeton University Press. ISBN 9781400830169. Go to original source...
    37. Woodford, M. (2013). Forward Guidance by Inflation-Targeting Central Banks. Sveriges Riksbank Economic Review, 2013(3), 81-120.

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content