Template-Type: ReDIF-Paper 1.0
Author-Name: Fiorella De Fiore
Author-X-Name-First: Fiorella
Author-X-Name-Last: De Fiore
Author-Name: Marco Jacopo Lombardi
Author-X-Name-First: Marco Jacopo
Author-X-Name-Last: Lombardi
Author-Name: Giacomo Mangiante
Author-X-Name-First: Giacomo
Author-X-Name-Last: Mangiante
Title: The asymmetric and heterogeneous pass-through of input prices to firms' expectations and decisions
Abstract: This paper studies the pass-through of input price shocks to firms' expectations and pricing decisions using firm-level data from the Bank of Italy's Survey on Inflation and Growth Expectations. We find a strong and asymmetric pass-through: positive input price shocks significantly raise firms' price expectations, realised prices and short-term inflation expectations, while negative shocks have little impact. The pass-through varies systematically with firm characteristics: it is higher for upstream firms and for firms facing greater uncertainty, adjusting prices more frequently, or operating with thinner profit margins. Macroeconomic conditions also matter: firms' expectations respond more strongly to business-specific signals in periods of low inflation and to aggregate signals in periods of high inflation. Finally, we show that providing firms with information about current inflation dampens the pass-through to inflation expectations, underscoring the importance of central bank communication.
Creation-Date: 2025-11
File-URL: https://www.bis.org/publ/work1305.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1305.htm
File-Format: text/html
Number: 1305
Keywords: pass-through, heterogeneous firm expectations, survey data, inflation
Classification-JEL: D22, D84, E31, E50
Handle: RePEc:bis:biswps:1305