Forward Guidance and Heterogeneous Beliefs
Bibliographic Data
| ID | 19036041 |
|---|---|
| Authors | Philippe Andrade (corresponding author), Gaetano Gaballo (0000-0001-9631-4247), Éric Mengus (0000-0002-9594-5116), Benoı̂t Mojon |
| Year | 2019 |
| Volume | 11 |
| Issue | 3 |
| Pages | 1-29 |
| Publication date | 2019-06-28 |
| Open Access | No |
| Type | ARTICLE |
| Venue | American Economic Journal Macroeconomics (JOURNAL) |
| Journal identifiers | ISSN: 1945-7715 • E-ISSN: 1945-7707 |
| Publisher | American Economic Association (PUBLISHER • US) |
| DOI | 10.1257/mac.20180141 |
| OpenAlex | W3023660006 |
| Language | NL |
| Citations received | 5 |
| References cited | 3 |
Central banks’ announcements that rates are expected to remain low could signal either a weak macroeconomic outlook, which would slow expenditures, or a more accommodative stance, which may stimulate economic activity. We use the Survey of Professional Forecasters to show that, when the Fed gave guidance between 2011:III and 2012:IV, these two interpretations coexisted despite a consensus on low expected rates. We rationalize these facts in a New-Keynesian model where heterogeneous beliefs introduce a trade-off in forward guidance policy: leveraging on the optimism of those who believe in monetary easing comes at the cost of inducing excess pessimism in non-believers. (JEL D83, E12, E43, E52, E58, E65)
Central bank · Economics · Keynesian economics · Monetary economics · Monetary policy · New Keynesian economics · Optimism · Pessimism · Fiscal Policies and Political Economy · Market Dynamics and Volatility · Monetary Policy and Economic Impact · Psychology · Social Psychology
| Citations per year | 1 |
|---|---|
| Citation span | 2021 - 2024 (4) |
| Highly cited | No |