A0194
Title: Housing prices and inflation expectations
Authors: Nektarios Michail - Central Bank of Cyprus (Cyprus)
Christos Savva - Cyprus University of Technology (Cyprus) [presenting]
Abstract: Inflation and inflation expectations are some of the most watched macroeconomic variables, given their importance for both social and policy purposes. While usual inflation targets usually stand at two percent, households' inflation perceptions differ substantially. Using a panel VAR approach and data for all euro area countries, the focus is on identifying the main determinants of households' inflation expectations and perceptions. Our findings suggest that house price fluctuations have a primary role in the formation of public inflation expectations and perceptions. Furthermore, interest rate and GDP shock substantially affect both expectations and perceptions, while oil price disturbances appear to have a significant but short-lived impact.
