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https://marginalrevolution.com/marginalrevolution/2021/10/do-inflation-expectations-matter-for-inflation.html https://marginalrevolution.com/marginalrevolution/2021/10/do... > I went to read the paper, and I have to say I am baffled. It didn’t change my priors at all. I didn’t see new empirical estimates, or new theoretical arguments, and furthermore I didn’t see the most relevant factors discussed much. I did see a lot of pokes at Friedman, Phelps, and Lucas (and there is also an introductory assertion that, even given enough time, markets with flexible prices do not clear. Then he goes on to deny that the theory of household choice is sufficient to derive downward-sloping demand…why do that???). > I would start by looking at the clearest cases where inflationary expectations do matter. If inflation rates become quite high (say above forty percent?), many people switch to alternate currencies. Or in hyperinflations the velocity of money, after some point, accelerates very dramatically, thereby fueling the inflation further. So inflation expectations really do matter, as supported by both theory and evidence. Contrary to Rudd, the theoretical case is there, though the question of magnitude at lower inflation rates is largely an open one. But let’s not slip from “open” to “we are justified in thinking they don’t matter very much at all.”