Diana Gabrielyan will defend her doctoral thesis „Essays on Inflation, Expectations and Central Bank Communication“

On 21 February at 14:00 Diana Gabrielyan will defend her doctoral thesis „Essays on Inflation, Expectations and Central Bank Communication“ for obtaining the degree of Doctor of Philosophy (in Economics).

Supervisors:
Associate Professor Jaan Masso, University of Tartu 
Associate Professor Lenno Uusküla, University of Tartu, Luminor Bank

Opponents:
Anita Suurlaht-Donaldson, Estonian Bank (Estonia)
Vegard Høghaug Larsen, BI Norwegian Business School (Norway)

Summary
Having a good understanding of current and future inflation dynamics is important for central banks to make informed decisions. Expectations become especially relevant during extreme economic events or when the economic landscape is full of uncertainty. The studies in this thesis have inflation and central bank communication as the common denominator, either directly or indirectly and emphasise the role of expectations in understanding and forecasting inflation and ensuring relevant communication. Therefore, this work's aim is to provide evidence that the key to the inflation targeting area of economic policy is in understanding and forecasting inflation and inflation expectations and ensuring relevant communication. The first dimension through which this thesis contributes to economic literature is through experiments comparing various machine learning and traditional econometric methods. Employing news data is another novelty and the second contribution of this thesis, allowing for state-of-the-art forecasts and test economic relationships. The last major contribution of this thesis is casting light on the role of media in the expectation formation process of economic agents. In studies I and II of this thesis, inflation is forecasted using the Phillips curve and a machine learning model, respectively, with the latter building on the data of inflation expectations. Study III challenges the usage of survey-based measures and instead proposes new, high-dimensional and potentially real-time measure of inflation expectations that is able to capture household's true information space about the economy. Study IV contributes to the literature on analysing the effects of central bank communication through an empirical study on the communication reaction function of the European Central Bank.

The defence will be held in Narva Rd. 18–2046 and online

Thesis: https://hdl.handle.net/10062/95030

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