Tag: survey data

Tomorrow’s costs, today’s prices: why expectations matter for inflation

Boromeus Wanengkirtyo, Ivan Yotzov and Mishel Ghassibe

Can tomorrow’s costs affect firm prices today? When a temporary tariff schedule on imported inputs was announced in March 2019, many UK firms adjusted prices in anticipation – despite the potential cost change being in the future. In a recent working paper, we use firm‑level survey data to estimate ‘intertemporal pass‑through’ (IPT): how much expected future marginal costs move current prices. Consistent with modern macroeconomic theory, we find big differences across firms: those that change prices less often, and expect the shock sooner, responded the most. A model shows this variation across firms makes aggregate inflation more forward‑looking, so announcements of future policies can move inflation today.

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Who took out mortgage payment holidays during the pandemic?

Georgina Green

The take-up of mortgage payment holidays in the UK during the Covid-19 pandemic was extraordinary: according to UK Finance, holidays granted reached a peak of 1.9 million during the pandemic, or roughly one in six mortgages. But which households benefited from the scheme? In this post I use rich UK household survey data to conduct an in-depth analysis of the distribution of the debt-relief scheme at an individual level. I find that borrowers struggling to keep up with payments during Covid applied for a holiday, suggesting the scheme played an important role in preventing a sharp rise in defaults. There is also evidence that some households may have taken them as insurance against future shocks, possibly dampening precautionary spending cuts.

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