Do Inflation Expectations Propagate the Inflationary Impact of Real Oil Price Shocks?: Evidence from the Michigan Survey

Abstract

This paper presents evidence that inflation expectations, as measured by the Michigan Survey of Consumers, only play a minimal role in the propagation of real oil price shocks into inflation. This is despite evidence that confirms that inflation expectations are sensitive to real oil price shocks. Further analysis suggests that after the 1990s, inflation expectations may have played no part in propagating real oil price shocks into inflation.