Inflation expectations proprieties during the war: The case of Ukraine
DOI:
https://doi.org/10.18559/ebr.2025.1.1813Keywords:
inflation expectations, mutual information, dynamic time warping, warAbstract
This study compares consumer and professional inflation expectations in Ukraine before and during the Russian invasion of Ukraine. We apply entropy-based measures to tackle co-movements of expectations and macro variables (inflation, food inflation, exchange rate and production) and dynamic time warping to assess their forward and backward orientation. The pre-war sample spans from May 2019 to February 2022, and the war sample from March 2022 to December 2024. We expected to find differences between pre-war and wartime samples, as war constitutes a political shock with severe economic consequences. The study confirms the change of expectations: more substantial mutual information with past inflation in most cases, better alignment between professionals and consumers, and a change in the distances between expectations and past or future inflation. This is the first empirical study discussing Ukrainian economic agents’ expectations during the full-scale invasion.
JEL Classification
Miscellaneous Mathematical Tools (C65)
Expectations • Speculations (D84)
General (E50)
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Copyright (c) 2025 Magdalena Szyszko, Aleksandra Rutkowska, Olena Motuzka
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