Subjective Models of the Macroeconomy: Evidence from Experts and Representative Samples

Peter Andre, Carlo Pizzinelli, Christopher Roth and Johannes Wohlfart

No 7850, CESifo Working Paper Series from CESifo

Abstract: We study people’s subjective models of the macroeconomy and shed light on their attentional foundations. To do so, we measure beliefs about the effects of macroeconomic shocks on unemployment and inflation, holding constant information about previous realizations of macroeconomic variables. 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 either supply-side or demand-side channels. Moreover, households with different personal experiences recall different propagation channels of the shocks, while experts tend to recall 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)
Date: 2019
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (67)

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Related works:
Journal Article: Subjective Models of the Macroeconomy: Evidence From Experts and Representative Samples (2022)
Working Paper: Subjective Models of the Macroeconomy: Evidence From Experts and Representative Samples (2021)
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 A REPRESENTATIVE SAMPLE (2019)
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