Heterogeneity in Consumers' Economic Expectations Across Euro Area Countries

Lena Dräger, Michal Marenčák, Giang Nghiem and Maritta Paloviita

No 12725, CESifo Working Paper Series from CESifo

Abstract: This paper examines cross-country differences in consumer expectations about macroeconomic outcomes and mortgage borrowing conditions within a monetary union. Using harmonized microdata from the ECB Consumer Expectations Survey for eleven euro area countries, we document significant national disparities. By sequentially adding a rich set of consumer- and country-specific macro controls to pooled regressions with country fixed effects, we find that these factors account for much, but not all, of the cross-country heterogeneity in expectations. These remaining differences likely reflect unobserved country-specific factors, highlighting the need for country-tailored monetary policy communication to effectively stabilize consumer expectations.

Keywords: country heterogeneity; expectations; consumer expectations survey (search for similar items in EconPapers)
JEL-codes: D30 D84 E31 E52 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12725

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