Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/300348 
Year of Publication: 
2024
Series/Report no.: 
GLO Discussion Paper No. 1463
Publisher: 
Global Labor Organization (GLO), Essen
Abstract: 
Prior research has documented that attention to inflation shifts when inflation surpasses a 3-4% threshold. In this note we examine how attention to inflation declines in episodes of disinflation. We show that for countries where inflation has returned to "normal" (pre-threshold) levels, attention remains 2-3 times higher than it was before the run-up of inflation. We show evidence that wage growth is more strongly correlated with past inflation when attention is high. This is one possible mechanism behind the slower-than-expected disinflation in late 2023 and early 2024.
Subjects: 
inflation
attention
persistence
threshold
JEL: 
E31
E52
E70
Document Type: 
Working Paper

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