Inflation expectations proprieties during the war: The case of Ukraine
This study compares consumer and professional inflation expectations in Ukraine before and during the Russian invasion of Ukraine. We apply entropy-based measures to tackle co-movements of expectations and macro variables (inflation, food inflation, exchange rate and production) and dynamic time war...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Sciendo
2025-04-01
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| Series: | Economics and Business Review |
| Subjects: | |
| Online Access: | https://doi.org/10.18559/ebr.2025.1.1813 |
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| Summary: | This study compares consumer and professional inflation expectations in Ukraine before and during the Russian invasion of Ukraine. We apply entropy-based measures to tackle co-movements of expectations and macro variables (inflation, food inflation, exchange rate and production) and dynamic time warping to assess their forward and backward orientation. The pre-war sample spans from May 2019 to February 2022, and the war sample from March 2022 to December 2024. We expected to find differences between pre-war and wartime samples, as war constitutes a political shock with severe economic consequences. The study confirms the change of expectations: more substantial mutual information with past inflation in most cases, better alignment between professionals and consumers, and a change in the distances between expectations and past or future inflation. This is the first empirical study discussing Ukrainian economic agents’ expectations during the full-scale invasion. Its novel aspect also concerns the method applied—standard procedures cannot be used for this sample length. |
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| ISSN: | 2450-0097 |