Subjective Models of the Macroeconomy: Evidence from Experts and Representative Samples
Publikation: Bidrag til tidsskrift › Review › Forskning › fagfællebedømt
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Subjective Models of the Macroeconomy : Evidence from Experts and Representative Samples. / Andre, Peter; Pizzinelli, Carlo; Roth, Christopher; Wohlfart, Johannes.
I: Review of Economic Studies, Bind 89, Nr. 6, 01.11.2022, s. 2958-2991.Publikation: Bidrag til tidsskrift › Review › Forskning › fagfællebedømt
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TY - JOUR
T1 - Subjective Models of the Macroeconomy
T2 - Evidence from Experts and Representative Samples
AU - Andre, Peter
AU - Pizzinelli, Carlo
AU - Roth, Christopher
AU - Wohlfart, Johannes
N1 - Publisher Copyright: © 2022 The Author(s). Published by Oxford University Press on behalf of The Review of Economic Studies Limited.
PY - 2022/11/1
Y1 - 2022/11/1
N2 - 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, providing respondents with identical information about the parameters of the shocks and previous realizations of macroeconomic variables. Within samples of 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 because respondents think of different propagation channels of the shocks, in particular demand- vs. supply-side mechanisms. We provide evidence on the role of associative memory in driving heterogeneity in thoughts and forecasts: contextual cues and prior experiences shape which propagation channels individuals retrieve and thereby which forecasts they make. Our findings offer a new perspective on the widely documented disagreement in macroeconomic expectations.
AB - 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, providing respondents with identical information about the parameters of the shocks and previous realizations of macroeconomic variables. Within samples of 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 because respondents think of different propagation channels of the shocks, in particular demand- vs. supply-side mechanisms. We provide evidence on the role of associative memory in driving heterogeneity in thoughts and forecasts: contextual cues and prior experiences shape which propagation channels individuals retrieve and thereby which forecasts they make. Our findings offer a new perspective on the widely documented disagreement in macroeconomic expectations.
KW - Associations
KW - Attention
KW - D83
KW - D84
KW - E31
KW - E52
KW - E71
KW - Expectation formation
KW - Experiences
KW - Fiscal policy
KW - Macroeconomic shocks
KW - Monetary policy
KW - Subjective models
KW - Thoughts
UR - http://www.scopus.com/inward/record.url?scp=85131845396&partnerID=8YFLogxK
U2 - 10.1093/restud/rdac008
DO - 10.1093/restud/rdac008
M3 - Review
AN - SCOPUS:85131845396
VL - 89
SP - 2958
EP - 2991
JO - Review of Economic Studies
JF - Review of Economic Studies
SN - 0034-6527
IS - 6
ER -
ID: 334351383