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Monetary Policy Communications and their Effects on Household Inflation Expectations

Olivier Coibion, Yuriy Gorodnichenko, Michael Weber and Michael Weber
Authors registered in the RePEc Author Service: Michael Weber ()

No 7464, CESifo Working Paper Series from CESifo

Abstract: We study how different forms of communication influence the inflation expectations of individuals in a randomized controlled trial. We first solicit individuals’ inflation expectations in the Nielsen Homescan panel and then provide eight different forms of information regarding inflation. Reading the actual Federal Open Market Committee (FOMC) statement has about the same average effect on expectations as simply being told about the Federal Reserve’s inflation target. Reading a news article about the most recent FOMC meetings results in a forecast revision which is smaller by half. Our results have implications for how central banks should communicate to the broader public.

Keywords: expectations management; inflation expectations; surveys; communication; randomized controlled trial (search for similar items in EconPapers)
JEL-codes: E31 C83 D84 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-exp, nep-mac and nep-mon
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