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A study on anchoring Swedish inflation expectations in times of turbulence
Södertörn University, School of Social Sciences, Economics.ORCID iD: 0000-0003-3747-9038
Södertörn University, School of Social Sciences, Economics.ORCID iD: 0009-0002-3678-0275
2025 (English)In: Energy Economics, ISSN 0140-9883, E-ISSN 1873-6181, Vol. 144, article id 108416Article in journal (Refereed) Published
Abstract [en]

This study examines the anchoring of inflation expectations in Sweden during the period characterised by volatile energy prices and elevated inflation. Using inflation expectations data from Swedish households (HH) and money market participants (MMP) through June 2024, as well as financial market participants (MB) up to April 2023, we employ a kernel-based regularised least squares model to estimate pointwise marginal responses. A Markov Regime Switching Autoregressive model is subsequently applied to identify structural breaks characterised by regime shifts in marginal responses to energy price and underlying inflation, respectively. Our findings indicate that recent turbulence has triggered multiple breaks, Specifically, MMP 1-year expectations oscillate between being anchored and unanchored in response to energy price inflation, whereas MMP 5-year expectations remain anchored to energy price shocks but exhibit shifts in persistence and volatility. Additionally, we find that all inflation expectations remain anchored to underlying inflation despite the turbulence. This suggests that recent fluctuations in inflation expectations can largely be attributed to energy price inflation. These results contrast with those derived from models that exclude structural breaks, underscoring the importance of incorporating dynamic features when assessing the anchoring of inflation expectations. 

Place, publisher, year, edition, pages
Elsevier, 2025. Vol. 144, article id 108416
Keywords [en]
Anchoring of inflation expectations, Economic turbulence, Energy price inflation, Pointwise marginal responses, Regime switching, Anchoring of inflation expectation, Anchorings, Energy prices, Marginals, Point wise, Pointwise marginal response, Price inflation, Inflation
National Category
Economics
Identifiers
URN: urn:nbn:se:sh:diva-56880DOI: 10.1016/j.eneco.2025.108416ISI: 001456255700001Scopus ID: 2-s2.0-105000596787OAI: oai:DiVA.org:sh-56880DiVA, id: diva2:1949426
Funder
The Foundation for Baltic and East European StudiesAvailable from: 2025-04-02 Created: 2025-04-02 Last updated: 2025-04-10Bibliographically approved

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Lin, XiangLi, Xiaoying

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CiteExportLink to record
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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • harvard-anglia-ruskin-university
  • apa-old-doi-prefix.csl
  • sodertorns-hogskola-harvard.csl
  • sodertorns-hogskola-oxford.csl
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf