Average Inflation Targeting and Household Expectations

Olivier Coibion, Yuriy Gorodnichenko, Edward Knotek and Raphael Schoenle

Journal of Political Economy Macroeconomics, 2023, vol. 1, issue 2, 403 - 446

Abstract: Using a daily survey of US households, we study how the Federal Reserve’s announcement of its new strategy of average inflation targeting affected households’ expectations. Starting with the day of the announcement, there is a small uptick in the minority of households reporting that they had heard news about monetary policy, but this effect fades within a few days. Those who heard news about the announcement do not seem to have understood the announcement. When provided with pertinent information about the new policy, households do not change their expectations. These patterns continue to hold 1 year after the announcement.

Date: 2023
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Related works:
Working Paper: Average Inflation Targeting and Household Expectations (2021)
Working Paper: Average Inflation Targeting and Household Expectations (2020)
Working Paper: Average Inflation Targeting and Household Expectations (2020)
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