%0 Report
        %A Gorodnichenko, Yuriy
%A Sergeyev, Dmitriy
        %T Zero Lower Bound on Inflation Expectations
        %D 2021
        %8 2021 Nov
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 14853
        %U https://www.iza.org/index.php/publications/dp14853
        %X We document a new fact: in U.S., European and Japanese surveys, households do not expect deflation, even in environments where persistent deflation is a strong possibil- ity. This fact stands in contrast to the standard macroeconomic models with rational expectations. We extend a standard New Keynesian model with a zero-lower bound on inflation expectations. Unconventional monetary policies, such as forward guid- ance, are weaker. In liquidity traps, the government spending output multiplier is finite, and adverse aggregate supply shocks are not expansionary. The possibility of confidence-driven liquidity traps is attenuated.
        %K inflation expectations
%K non-rational beliefs
%K survey data