František Mašek (Sapienza University Rome) 9.10.2025
It is our pleasure that František Mašek (Sapienza University Rome) will present on Thursday, October 9, 2025, at 12:45 in room RB436 about the topic “Households’ Inflation Expectations and Consumption in Macroeconomic Models: The Role of the Real Income Channel”.
Registration is not required and anyone who would like to attend is warmly invited.
It is also possible to participate online via MS Teams at this link. In case of any connection issues, please contact lubomir.cingl@vse.cz.
ABSTRACT: In the standard New Keynesian (NK) framework, an increase in households’ inflation expectations raises consumption. This conventional result rests on strong general equilibrium effects and the assumption that households do not perceive expected real income losses when inflation expectations rise. In this paper, I disentangle the underlying economic mechanisms and show that the consumption response can easily turn negative once empirically relevant features are taken into account. I decompose the total effect into an intertemporal substitution channel and a negative real income channel, under the empirically supported assumption that inflation expectations do not fully pass through to nominal wage expectations. In the Representative Agent NK model, consumption still increases because households also receive profits, which offset expected real wage decline. By contrast, in a stylized Heterogeneous Agent NK model, the total effect may turn negative if the profit channel is dampened and the disconnect between inflation and nominal wage expectations is sufficiently strong.
BIO: František Mašek holds a position as Senior Researcher in the Research Division of the National Bank of Slovakia and is in the final stages of his Ph.D. in Economics at Sapienza University of Rome, Department of Economics and Law. His research primarily focuses on monetary policy, heterogeneous agents, financial frictions, and bounded rationality models. He also works on causal inference, with a particular interest in quasi-experimental methods designed to capture spillovers in the presence of SUTVA violations. As part of his doctoral studies, he spent time at the University of Chicago and the Vienna University of Technology, and undertook a Ph.D. traineeship at the Directorate General Research of the European Central Bank.
