Forward Guidance and Household Expectations

Olivier Coibion, Dimitris Georgarakos, Yuriy Gorodnichenko and Michael Weber

Journal of the European Economic Association, 2023, vol. 21, issue 5, 2131-2171

Abstract: We compare causal effects of forward guidance about future interest rates on households’ expectations of inflation and nominal mortgage rates to the effects of communication about inflation in a randomized control trial using more than 20,000 U.S. consumers in the Nielsen Homescan Panel. We elicit consumers’ expectations, and then provide 22 different forms of information regarding past, current, and/or future interest rates and inflation. Information treatments about current or future interest rates all have similar and offsetting effects on interest rate and inflation expectations, yielding limited pass-through into perceived real rates. Information about mortgage rates has much more powerful effects on interest rate perceptions, with no offsetting effects on inflation expectations, thereby delivering much larger changes in perceived real rates. Revisions in perceived real rates causally lead to changes in the ex-post purchases of durable goods by households.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://hdl.handle.net/10.1093/jeea/jvad003 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Forward Guidance and Household Expectations (2023)
Working Paper: Forward Guidance and Household Expectations (2022)
Working Paper: Forward Guidance and Household Expectations (2020)
Working Paper: Forward Guidance and Household Expectations (2020)
Working Paper: Forward Guidance and Household Expectations (2020)
Working Paper: Forward Guidance and Household Expectations (2020)
Working Paper: Forward Guidance and Household Expectations (2020)
Working Paper: Forward Guidance and Household Expectations (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jeurec:v:21:y:2023:i:5:p:2131-2171.

Access Statistics for this article

Journal of the European Economic Association is currently edited by Romain Wacziarg

More articles in Journal of the European Economic Association from European Economic Association
Bibliographic data for series maintained by Oxford University Press ().