Can We Anchor Macroeconomic Expectations Across Party Lines? Evidence from a Randomized Control Trial

Siye Bae, Sangyup Choi, Sang-Hyun Kim, Myunghwan Andrew Lee and Myungkyu Shim
Additional contact information
Siye Bae: Northwestern University
Sang-Hyun Kim: Yonsei University
Myunghwan Andrew Lee: New York University
Myungkyu Shim: Yonsei University

No 2025rwp-255, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: We study how politically diverse households form and update macroeconomic expectations in response to public communication, using novel survey waves of Korean individuals conducted in 2022 during a historic inflation surge. The survey includes a randomized information treatment in which respondents are exposed to government forecasts about inflation stabilization, with treatments varying in messenger, framing, media source, and numerical content. We first document substantial political polarization in macroeconomic beliefs, including inflation expectations. We then find that only pro-government individuals revise their expectations downward in response to the information, while anti-government and centrist individuals remain largely unresponsive, regardless of message source, content, or presentation. These asymmetric responses are driven by differences in trust toward the policy authority, which are themselves linked to partisanship, highlighting the challenges of anchoring expectations in politically polarized environments.

Keywords: Inflation expectations; Macroeconomic beliefs; Partisan bias; Central bank communication; Household survey (search for similar items in EconPapers)
JEL-codes: C83 D84 E31 (search for similar items in EconPapers)
Pages: 51pages
Date: 2025-07
New Economics Papers: this item is included in nep-mon
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