News and households' subjective macroeconomic expectations

Joshy Easaw and Atanu Ghoshray

Journal of Macroeconomics, 2010, vol. 32, issue 1, 469-475

Abstract: The purpose of the present paper is to provide microfoundations of how households form subjective expectations of the macroeconomy. We focus on the role of perceived news; distinguishing between good and bad news. The paper introduces a testable model where households give unequal importance (or weights) to 'good' and 'bad' news. The model is empirically verified using household survey data compiled for the US. The results indicate clearly that households give no weight to bad news in the long-run.

Keywords: Household; expectations; formation; Perceived; 'good'; and; 'bad'; news (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:32:y:2010:i:1:p:469-475

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