Forward Guidance and Household Expectations

Olivier Coibion, Dimitris Georgarakos, Yuriy Gorodnichenko and Michael Weber

Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley

Abstract: 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.

Keywords: Clinical Research; Clinical Trials and Supportive Activities; expectations management; inflation expectations; surveys; communication; randomized controlled trial; Economics (search for similar items in EconPapers)
Date: 2023-01-01
References: Add references at CitEc
Citations: View citations in EconPapers (25)

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https://www.escholarship.org/uc/item/7np4511v.pdf;origin=repeccitec (application/pdf)

Related works:
Journal Article: 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)
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