Exposure to Daily Price Changes and Inflation Expectations

D’Acunto, Francesco; Malmendier, Ulrike; Ospina, Juan; Weber, Michael

doi:10.2139/ssrn.3436357

Cited by 13 publications

(16 citation statements)

References 53 publications

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“…Alternatively, if the price of goods purchased by households rises today and they do not alter their spending patterns much, their spending will be higher and they will likely raise their inflation expectations, since households generally form expectations based on the prices of goods they typically purchase (D'Acunto, Malmendier, Ospina, and Weber 2019). A positive correlation between spending and inflation expectations therefore need not imply a causal relationship from expectations to spending decisions.…”

Section: A the State Of The Literaturementioning

confidence: 99%

Communication and the Beliefs of Economic Agents

Candia¹,

Coibion²,

Gorodnichenko³

2020

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New surveys provide a wealth of information on how economic agents form their expectations and how those expectations shape their decisions. We review recent evidence on how changes in macroeconomic expectations, particularly inflation expectations, affect households' and firms' actions. We show that the provision of information about inflation to households and firms can sometimes backfire in terms of their subsequent decisions. Whether or not this is the case hinges on how individuals interpret the news about inflation: supply-side interpretations ("inflation is bad for the economy") lead to negative income effects, which can depress economic activity. We show that households in advanced economies, unlike professional forecasters, typically have such a supply-side interpretation, as do many firms. New communication strategies could avoid public misinterpretation of policy decisions.

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Section: A the State Of The Literaturementioning

confidence: 99%

Communication and the Beliefs of Economic Agents

Candia¹,

Coibion²,

Gorodnichenko³

2020

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“…We leave out of the analysis a variety of other plausible theories, which help explain different types of data. These include wishful thinking (e.g., Brunnermeier and Parker, 2005;Caplin and Leahy, 2019); 9 For a detailed discussion of this difference, see the end of Section 5 and the accompanying Appendix B. over-weighting of personal experience (e.g., Malmendier and Nagel, 2016;D'Acunto, Malmendier, Ospina, and Weber, 2019;Das, Kuhnen, and Nagel, 2020); adaptive learning (e.g., Eusepi and Preston, 2011;Evans and Honkapohja, 2001;Sargent, 2001); uncertainty shocks (e.g., Bloom, 2009a;Baker, Bloom, and Davis, 2016); robustness and ambiguity (e.g., Hansen and Sargent, 2012;Ilut and Schneider, 2014;Bhandari, Borovička, and Ho, 2019); non-Bayesian belief contagion (e.g., Carroll, 2001;Burnside, Eichenbaum, and Rebelo, 2016); and other plausible departures from the fully rational model (e.g., Adam and Woodford, 2012;Gabaix, 2019;Molavi, 2019;Woodford, 2018).…”

Section: Focusing On Impulse Response Functions (Irfs)mentioning

confidence: 99%

Imperfect Macroeconomic Expectations: Evidence and Theory

Angeletos¹,

Huo²,

Sastry³

2020

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We document a new fact about survey expectations: in response to the main shocks driving the business cycle, expectations of unemployment and inflation under-react initially but overshoot later on. We show how previous, seemingly conflicting, evidence can be understood as different facets of this fact. We finally explain what the cumulated evidence means for macroeconomic theory. There is little support for theories emphasizing under-extrapolation or two close cousins of it, cognitive discounting and level-K thinking. Instead, the evidence favors the combination of dispersed, noisy information and over-extrapolation. * This paper was prepared for the 2020 NBER Macroeconomics Annual. We owe special thanks to our discussants, Ricardo Reis and Jessica Watcher, and the organizers, Martin Eichenbaum and Erik Hurst. We also thank Fabrice Collard for help with some of the material in Section 5. We finally thank Jeffrey Campbell, Olivier Coibion, Nicola Gennaioli, Cosmin Ilut, Yueran Ma, and Alp Simsek for useful comments. Angeletos acknowledges the financial support of the National Science Foundation (Award #1757198).

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“…If information access depends on an individual's gender, absent knowing the nature of the missing, inaccurate, or emphasized information, it may be difficult for individuals to correct these disparities. Research demonstrates substantial gender gaps in knowledge of fundamental economic parameters, which are used to inform consumption, financial, and labor market choices (D'Acunto et al, 2019;Dwyer et al, 2002). Our work points to disparate information access as one plausible determinant of these knowledge and behavior gaps.…”

Section: Discussionmentioning

confidence: 79%

Informed Choices: Gender Gaps in Career Advice

Gallen

2021

SSRN Journal

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This paper estimates gender differences in access to informal information regarding the labor market. We conduct a large-scale field experiment in which real college students seek information from 10,000 working professionals about various career paths, and we randomize whether a professional receives a message from a male or a female student. We focus the experimental design and analysis on two career attributes that prior research has shown to differentially affect the labor market choices of women: the extent to which a career accommodates work/life balance and has a competitive culture. When students ask broadly for information about a career, we find that female students receive substantially more information on work/life balance relative to male students. This gender difference persists when students disclose that they are concerned about work/life balance. In contrast, professionals mention workplace culture to male and female students at similar rates. After the study, female students are more dissuaded from their preferred career path than male students, and this difference is in part explained by professionals' greater emphasis on work/life balance when responding to female students. Finally, we elicit students' preferences for professionals and find that gender differences in information provision would remain if students contacted their most preferred professionals.

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Exposure to Daily Price Changes and Inflation Expectations

Cited by 13 publications

References 53 publications

Communication and the Beliefs of Economic Agents

Communication and the Beliefs of Economic Agents

Imperfect Macroeconomic Expectations: Evidence and Theory

Informed Choices: Gender Gaps in Career Advice

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