Working Paper: NBER ID: w27384
Authors: Olivier Coibion; Yuriy Gorodnichenko; Michael Weber
Abstract: Using a large-scale survey of U.S. households during the Covid-19 pandemic, we study how new information about fiscal and monetary policy responses to the crisis affects households’ expectations. We provide random subsets of participants in the Nielsen Homescan panel with different combinations of information about the severity of the pandemic, recent actions by the Federal Reserve, stimulus measures, as well as recommendations from health officials. This experiment allows us to assess to what extent these policy announcements alter the beliefs and spending plans of households. In short, they do not, contrary to the powerful effects they have in standard macroeconomic models.
Keywords: No keywords provided
JEL Codes: C83; E31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Informing households about COVID-19 recovery and contagion rates (treatment T6) (C81) | Perceived probability of finding a job (J68) |
| Treatment T2 (Federal Reserve actions) (E52) | Inflation expectations (E31) |
| Fiscal and monetary policy treatments (treatments T2, T3, T4) (E63) | Expectations for inflation, unemployment, or mortgage rates (E47) |
| Policy responses (E69) | Household expectations or plans (D19) |