Subjective Models of the Macroeconomy: Evidence From Experts and Representative Samples
Peter Andre (),
Carlo Pizzinelli (),
Christopher Roth and
Johannes Wohlfart ()
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Peter Andre: University of Bonn
Carlo Pizzinelli: IMF
Johannes Wohlfart: Department of Economics, University of Copenhagen, CEBI, CESifo, Danish Finance Institute
No 119, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany
We study people’s subjective models of the macroeconomy and shed light on their at-tentional foundations. To do so, we measure beliefs about the eﬀects of macroeconomic shocks on unemployment and inﬂation, providing respondents with identical information about the parameters of the shocks and previous realizations of macroeconomic vari-ables. Within samples of both 6,500 US households and 1,500 experts, beliefs are widely dispersed, even about the directional eﬀects of shocks, and there are large diﬀerences in average beliefs between households and experts. Part of this disagreement seems to arise from selective retrieval of diﬀerent propagation channels of macroeconomic shocks. We conﬁrm this mechanism causally by exogenously shifting households’ attention to ei-ther supply-side or demand-side channels. Moreover, households with diﬀerent personal experiences recall diﬀerent propagation channels of the shocks, while experts tend to re-call textbook models. Our ﬁndings oﬀer a new perspective on the widely documented disagreement in macroeconomic expectations.
Keywords: Expectation Formation; Subjective Models; Associations; Thoughts; Attention; Experiences; Macroeconomic Shocks; Monetary Policy; Fiscal Policy. (search for similar items in EconPapers)
JEL-codes: D83 D84 E31 E52 E71 (search for similar items in EconPapers)
Pages: 150 pages
New Economics Papers: this item is included in nep-lab and nep-mac
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_119_2021.pdf First version, 2021 (application/pdf)
Working Paper: Subjective Models of the Macroeconomy: Evidence from Experts and a Representative Sample (2021)
Working Paper: Subjective Models of the Macroeconomy: Evidence from Experts and Representative Samples (2019)
Working Paper: SUBJECTIVE MODELS OF THE MACROECONOMY: EVIDENCE FROM EXPERTS AND A REPRESENTATIVE SAMPLE (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:119
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