Firms’ Inflation and Wage Expectations During the Inflation Surge
Using a new survey of French firms spanning the full 2020–2025 inflation cycle, we document that de-anchoring and passthrough decoupled during the inflation surge: the firms whose expectations drifted furthest from target were precisely those that did not act on them, while firms that embedded expectations into wages and prices remained relatively well anchored. A growing tail of firms expected persistently high inflation — “inflation disasters” — but these were disproportionately smaller, less attentive firms extrapolating local cost pressures. As a result, the surge in expectations did not generate wage-price dynamics, limiting the scope for a self-sustaining inflation spiral.
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Copy CitationErwan Gautier, Frédérique Savignac, and Olivier Coibion, "Firms’ Inflation and Wage Expectations During the Inflation Surge," NBER Working Paper 33799 (2025), https://doi.org/10.3386/w33799.Download Citation
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