https://macropaperwarehouse.com/authors/rafi-melnick/Rafi MelnickHugo -- gohugo.ioen-usThu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/information-and-the-formation-of-inflation-expectations-by-firms-evidence-from-a-survey-of-israeli-firms/Thu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/information-and-the-formation-of-inflation-expectations-by-firms-evidence-from-a-survey-of-israeli-firms/<p><strong>Research question and motivation.</strong> How do firms form and update inflation expectations during a monetary-policy regime change and a transition from high/volatile inflation to a low, stable, inflation-targeting environment? This matters because tracking and managing expectations is central to modern monetary policy (especially under forward guidance), yet high-quality firm-level expectations data—particularly across regime changes—are scarce (Bernanke 2007). A central tension in the literature is that firms and households in long-stable advanced economies are largely inattentive to inflation and monetary policy, plausibly because successful stabilization removes the incentive to monitor them. Israel offers a natural experiment: its recent history of high inflation and dollarization, followed by disinflation, de-dollarization, and the anchoring of expectations at the ~2% target midpoint around 2003.</p>