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Gilt by Association: Uncovering Expected Inflation

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One unfortunate aspect of life in the United States today is that guesses about inflation really matter. We have to consider expected changes in the cost of living when negotiating our wages. Similarly, we need to think about future inflation when computing both the returns to investing and the cost of borrowing. Explicitly or implicitly, inflation expectations have become an integral part of all our economic decisions.

One unfortunate aspect of life in the United States today is that guesses about inflation really matter. We have to consider expected changes in the cost of living when negotiating our wages. Similarly, we need to think about future inflation when computing both the returns to investing and the cost of borrowing. Explicitly or implicitly, inflation expectations have become an integral part of all our economic decisions.


Suggested citation: Haubrich, Joseph G., and Ann M. Dombrosky, 1992. "Gilt by Association: Uncovering Expected Inflation," Federal Reserve Bank of Cleveland, Economic Commentary, 06.01.1992.

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