Download or read book Public Debt and Household Inflation Expectations written by Francesco Grigoli and published by International Monetary Fund. This book was released on 2023-03-17 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use randomized controlled trials in the US, UK, and Brazil to examine the causal effect of public debt on household inflation expectations. We find that people underestimate public debt levels and increase inflation expectations when informed about the correct levels. The extent of the revisions is proportional to the size of the information surprise. Confidence in the central bank considerably reduces the sensitivity of inflation expectations to public debt. We also show that people associate high public debt with stagflationary effects and that the sensitivity of inflation expectations to public debt is considerably higher for women and low-income individuals.