Date: 11 February 2026, Wednesday
Time: 10.30 – 11.30
Place: MA-330
“Inflation Expectations and Firms’ Decisions in High Inflation”
by
Okan Akarsu
Sabancı University
Abstract
We conducted a survey of Turkish firms, using randomized treatments to provide varied information about inflation in a high-inflation environment. By matching the survey data with administrative firm-level data on employment, sales, credit, and foreign exchange transactions, we explore the impact of exogenous variations in inflation expectations on firms’ behavior, borrowing decisions, and expectations. Our findings are summarized in seven facts: (i) information treatments are effective at generating exogenous variation in inflation expectations, even when inflation is high; (ii) the pass-through to firms’ own price, wage, and cost expectations is strong, reaching up to 60%; (iii) firms adopt a supply-side interpretation of inflation—lower inflation expectations make them more optimistic; (iv) firms with lower inflation expectations decrease credit demand by approximately 3% for a 1 percentage point decline in expected inflation, shifting from long-term to short-term loans to avoid higher perceived costs; (v) they dollarize their liabilities by increasing their share of FX-denominated debt; (vi) they de-dollarize their assets by decreasing their net foreign currency holdings; and (vii) they increase their real activity, leading to higher employment and sales, and lower inventory.
Bio
Okan Akarsu serves as a Research Economist at the International Economic Relations Department at the Central Bank of the Republic of Türkiye. Prior to this role, he served as a Researcher in the Structural Economic Research Department. He specializes in analyzing extensive microdata on firms, banks, and individuals, translating these insights into key empirical inputs that inform monetary policy decisions. In addition to his professional role, he is Ph.D. candidate at Department of Economics, Sabancı University. He holds a BA in Economics (minor in Mathematics) from Middle East Technical University.
His primary research interests are in Applied Macro-Finance, Monetary Policy and Banking. Specifically, he studies how economic agents form inflation expectations and how institutions and government policies shape credit market outcomes for banks and firms. Leveraging large-scale administrative and survey data, he produces evidence on the behavior and performance of firms, banks, and individuals to address core macroeconomic questions. His secondary interests include Financial Economics and Firm Dynamics.