Attention to the Macroeconomy

Sebastian Link, Andreas Peichl, Christopher Roth and Johannes Wohlfart
Additional contact information
Christopher Roth: University of Cologne
Johannes Wohlfart: Department of Economics, University of Copenhagen

No 23-09, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: We collect novel measures of households and firms attention to the economy using openended survey questions, fielded during a large shock to inflation, and provide three sets of facts. First, we characterize the variation in attention. Attention to the macroeconomy exhibits large and persistent cross-sectional heterogeneity, responds strongly to shocks, and is negatively correlated with attention to household- or firm-level topics. Second, we explore the link between attention and expectation formation. More attentive respondents adjust their inflation expectations more frequently during the shock, are more confident in their beliefs, and hold smaller misperceptions about realized inflation, yet their expectations about future inflation deviate more strongly from professional forecasts. Third, we provide evidence on potential drivers of attention. Levels of attention and changes in response to the shock are strongly correlated with economic exposure and information acquisition costs goal-oriented drivers but also with past inflation experiences a non-goal-oriented driver.

Keywords: Attention; Expectation formation; Experiences; Inflation. (search for similar items in EconPapers)
JEL-codes: D83 D84 E71 (search for similar items in EconPapers)
Pages: 69
Date: 2024-09-20
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Related works:
Working Paper: Attention to the Macroeconomy (2024)
Working Paper: Attention to the Macroeconomy (2023)
Working Paper: Attention to the Macroeconomy (2023)
Working Paper: Attention to the Macroeconomy (2023)
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