Elisabeth Falck

Welcome to my personal website.

I am an economist in the Directorate General Economics at the Deutsche Bundesbank and a fifth year Ph.D. student at the Goethe University Frankfurt.

Ph.D. supervisor: Prof. Mirko Wiederholt.

Research interests: Empirical macroeconomics, monetary economics, inflation dynamics, information economics and economic beliefs, business cycles.


Deutsche BundesbankDirectorate General EconomicsInternational and Euro Area Macroeconomic AnalysisWilhelm-Epstein-Straße 14 60431 Frankfurt am Main, Germany
Email: elisabeth.falck_at_bundesbank.de


Disagreement about Inflation Expectations and Monetary Policy Transmission, with M. Hoffmann and P. Hürtgen (Deutsche Bundesbank)

Accepted for publication at the Journal of Monetary Economics

Abstract: Time-variation in disagreement about inflation expectations is a stylized fact in surveys, but little is known on how disagreement interacts with the efficacy of monetary policy. This paper fills this gap in providing theoretical predictions of monetary policy shocks for different levels of disagreement and testing these empirically. When disagreement is high, a dispersed information New Keynesian model predicts that a contractionary monetary policy shock leads to a short-run rise in inflation and inflation expectations, whereas both decline when disagreement is low. Estimating a smooth-transition model on U.S. data shows significantly different responses in inflation and inflation expectations consistent with theory.

Latest version (Oct. 2018), Bundesbank Discussion Paper No. 29/2017, Bundesbank Research Brief, 15. Ausgabe - September 2017 (in German), VoxEU Article (November 2017)

Presented at the Annual Congress of the European Economic Association (EEA) in Lisboa, August 2017, the International Conference for Computing in Economics and Finance (CEF) in New York, June 2017, and the Society for Economic Dynamics Annual Meeting (SED) in Mexico City, June 2018.

Working paper

Pessimistic Beliefs and Consumption Spending

Abstract: Does individual pessimism about the economy matter for the decision making of agents? Previous empirical literature has a hard time to document a significant and robust relationship between inflation expectations and readiness to spend. Taking into account heterogeneity in sentiment about the general economy across households, I do uncover a stable relationship between inflation expectations and readiness to spend. Based on the Michigan survey of consumer expectations, I find that higher inflation expectations have no effect on spending for individuals with a pessimistic view about the state of the economy, while they matter for non-pessimistic individuals. Moreover, higher inflation expectations are negatively correlated with expected future consumption spending for pessimistic individuals. The results suggest that an increase in expected inflation can stimulate aggregate demand only for non-pessimistic consumers which has important implications for monetary policy. The results can be reconciled in a heteogenous agents model in which agents perceive a certain probability to switch to a worse state (a different island) in the future.

Regional price changes and inflation expectations of households

Abstract: What drives inflation expectations of households? This paper studies the impact of regional price changes on inflation expectations of private households in the United Kingdom. The analysis uses regional price data that underlies the official CPI index and matches it to household expectations data according to the households' geographical location. The results show that individual inflation expectations are strongly driven by regional prices for food, tobacco/alcohol, rents and restaurant menus. The impact of the prices of different product classes varies with the social status of the household and are in line with the different expenditure shares of food or restaurant visits in the consumption baskets of high- and low-income households. The results suggest that households extrapolate from experienced price changes when they form expectations about future aggregate inflation dynamics.

Other publications:

Twenty years of the ECB Survey of Professional Forecasters in the ECB Economic Bulletin Issue 1, 2019

with R. de Vincent-Humpfreys, I. Dimitrova, L. Henkel and A. Meyler.