Expected and Realized Inflation in Historical Perspective

This paper provides historical context for the relationship between expected and realized inflation. We begin with a discussion of early theoretical thought about how inflation expectations are formed. Then, we discuss survey- asset- based measures assess their empirical Expected strongly correlated over long samples, but short samples correlations can weaken. Lastly, to better understand subtleties interaction short-lived important events, provide narrative account during Great Depression 1930s, Inflation 1970s, Recession 2008–2009, recent COVID-19 pandemic. These episodes offer compelling evidence importance policy regime changes in dynamics.