Attention-Dependent Monetary Transmission to Household Beliefs

Jaemin Jeong (), Eunseong Ma and Choongryul Yang

No 2025-084, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: When do households listen to the Fed? We show the answer lies in a simple but powerful force: household attention to macroeconomic conditions. We develop a model where attention acts as a crucial gatekeeper for the pass-through of policy news to beliefs, and confirm its predictions using household survey data. We find that belief revisions to monetary policy surprises are concentrated among attentive individuals—particularly those with high financial stakes—and this effect strengthens dramatically during uncertain times. This implies the expectations channel is most potent when it matters most, suggesting policymakers should account for the time-varying and heterogeneous nature of public attention.

Keywords: Inflation expectations; Monetary policy; Rational inattention; Behavioral macroeconomics (search for similar items in EconPapers)
JEL-codes: D83 D84 E31 E52 (search for similar items in EconPapers)
Pages: 57 p.
Date: 2025-09-19
New Economics Papers: this item is included in nep-mon
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https://www.federalreserve.gov/econres/feds/files/2025084pap.pdf (application/pdf)

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Working Paper: Attention-Dependent Monetary Transmission to Household Beliefs (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2025-84

DOI: 10.17016/FEDS.2025.084

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