Event start date: 23.03.2023 16:00

On 23 March 2023, the National Bank of Ukraine hosted a seminar, Alexander M. Dietrich (Ph.D. candidate in Economics at the University of Tübingen) presented his paper Consumption Categories, Household Attention, and Inflation Expectations: Implications for Optimal Monetary Policy.

What inflation measure should central banks target? Should they target headline inflation that include all consumption categories? Or should they target core inflation as suggested by standard rational expectations theory? Alexander Dietrich in his research paper shows that optimal monetary policy requires targeting headline inflation. Households form their inflation expectations based on the most volatile consumption categories, which are excluded from core inflation index but attract most attention. The author testifies the results empirically and in a structural New Keynesian model.

Materials from the seminar are available via links below.