Are survey expectations theory-consistent? The role of central bank communication and news

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Are survey expectations theory-consistent? The role of central bank communication and news. / Dräger, Lena; Lamla, Michael J; Pfajfar, Damjan.
In: European Economic Review, Vol. 85, 01.06.2016, p. 84-111.

Research output: Journal contributionsJournal articlesResearchpeer-review

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Dräger L, Lamla MJ, Pfajfar D. Are survey expectations theory-consistent? The role of central bank communication and news. European Economic Review. 2016 Jun 1;85:84-111. doi: 10.1016/j.euroecorev.2016.01.010

Bibtex

@article{5444f082ba2e44b9852c80386cabf138,
title = "Are survey expectations theory-consistent?: The role of central bank communication and news",
abstract = "In this paper we analyze whether central bank communication can facilitate the understanding of key economic concepts. Using survey data for consumers and professionals, we calculate how many of them have expectations consistent with the Fisher Equation, the Taylor rule and the Phillips curve and test, by accounting for three different communication channels, whether central banks can influence those. A substantial share of participants has expectations consistent with the Fisher equation, followed by the Taylor rule and the Phillips curve. We show that having theory-consistent expectations is beneficial, as it improves the forecast accuracy. Furthermore, consistency is time varying. Exploring this time variation, we provide evidence that central bank communication as well as news on monetary policy can facilitate the understanding of those concepts and thereby improve the efficacy of monetary policy.",
keywords = "Economics, Macroeconomic expectations, Central bank communication, Monetary news, Survey microdata, Consumer forecast accuracy",
author = "Lena Dr{\"a}ger and Lamla, {Michael J} and Damjan Pfajfar",
year = "2016",
month = jun,
day = "1",
doi = "10.1016/j.euroecorev.2016.01.010",
language = "English",
volume = "85",
pages = "84--111",
journal = "European Economic Review",
issn = "0014-2921",
publisher = "Elsevier B.V.",

}

RIS

TY - JOUR

T1 - Are survey expectations theory-consistent?

T2 - The role of central bank communication and news

AU - Dräger, Lena

AU - Lamla, Michael J

AU - Pfajfar, Damjan

PY - 2016/6/1

Y1 - 2016/6/1

N2 - In this paper we analyze whether central bank communication can facilitate the understanding of key economic concepts. Using survey data for consumers and professionals, we calculate how many of them have expectations consistent with the Fisher Equation, the Taylor rule and the Phillips curve and test, by accounting for three different communication channels, whether central banks can influence those. A substantial share of participants has expectations consistent with the Fisher equation, followed by the Taylor rule and the Phillips curve. We show that having theory-consistent expectations is beneficial, as it improves the forecast accuracy. Furthermore, consistency is time varying. Exploring this time variation, we provide evidence that central bank communication as well as news on monetary policy can facilitate the understanding of those concepts and thereby improve the efficacy of monetary policy.

AB - In this paper we analyze whether central bank communication can facilitate the understanding of key economic concepts. Using survey data for consumers and professionals, we calculate how many of them have expectations consistent with the Fisher Equation, the Taylor rule and the Phillips curve and test, by accounting for three different communication channels, whether central banks can influence those. A substantial share of participants has expectations consistent with the Fisher equation, followed by the Taylor rule and the Phillips curve. We show that having theory-consistent expectations is beneficial, as it improves the forecast accuracy. Furthermore, consistency is time varying. Exploring this time variation, we provide evidence that central bank communication as well as news on monetary policy can facilitate the understanding of those concepts and thereby improve the efficacy of monetary policy.

KW - Economics

KW - Macroeconomic expectations

KW - Central bank communication

KW - Monetary news

KW - Survey microdata

KW - Consumer forecast accuracy

UR - http://www.scopus.com/inward/record.url?scp=84959924160&partnerID=8YFLogxK

U2 - 10.1016/j.euroecorev.2016.01.010

DO - 10.1016/j.euroecorev.2016.01.010

M3 - Journal articles

VL - 85

SP - 84

EP - 111

JO - European Economic Review

JF - European Economic Review

SN - 0014-2921

ER -

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