NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Monetary Policy Communications and their Effects on Household Inflation Expectations

Olivier Coibion, Yuriy Gorodnichenko, Michael Weber

NBER Working Paper No. 25482
Issued in January 2019
NBER Program(s):The Economic Fluctuations and Growth Program, The Monetary Economics Program

We study how different forms of communication influence the inflation expectations of individuals in a randomized controlled trial. We first solicit individuals’ inflation expectations in the Nielsen Homescan panel and then provide eight different forms of information regarding inflation. Reading the actual Federal Open Market Committee (FOMC) statement has about the same average effect on expectations as simply being told about the Federal Reserve’s inflation target. Reading a news article about the most recent FOMC meetings results in a forecast revision which is smaller by half. Our results have implications for how central banks should communicate to the broader public.

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Document Object Identifier (DOI): 10.3386/w25482

 
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