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Does Policy Communication during COVID Work?

Author

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  • Coibion, Olivier
  • Gorodnichenko, Yuriy
  • Weber, Michael
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.
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Suggested Citation

  • Coibion, Olivier & Gorodnichenko, Yuriy & Weber, Michael, 2022. "Does Policy Communication during COVID Work?," Department of Economics, Working Paper Series qt5wh5w14k, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt5wh5w14k
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    References listed on IDEAS

    as
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    7. Michael Woodford, 2019. "Monetary Policy Analysis When Planning Horizons Are Finite," NBER Macroeconomics Annual, University of Chicago Press, vol. 33(1), pages 1-50.
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    11. Francesco D’Acunto & Ulrike Malmendier & Juan Ospina & Michael Weber, 2019. "Exposure to Daily Price Changes and Inflation Expectations," NBER Working Papers 26237, National Bureau of Economic Research, Inc.
    12. Sergeyev, Dmitriy & Iovino, Luigi, 2018. "Central Bank Balance Sheet Policies Without Rational Expectations," CEPR Discussion Papers 13100, C.E.P.R. Discussion Papers.
    13. Coibion, Olivier & Gorodnichenko, Yuriy & Kumar, Saten & Pedemonte, Mathieu, 2020. "Inflation expectations as a policy tool?," Journal of International Economics, Elsevier, vol. 124(C).
    14. Dietrich, Alexander M. & Kuester, Keith & Müller, Gernot J. & Schoenle, Raphael, 2022. "News and uncertainty about COVID-19: Survey evidence and short-run economic impact," Journal of Monetary Economics, Elsevier, vol. 129(S), pages 35-51.
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    25. Olivier Coibion & Dimitris Georgarakos & Yuriy Gorodnichenko & Maarten van Rooij, 2023. "How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(3), pages 109-152, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    subjective expectations; fiscal policy; monetary policy; COVID-19; surveys; Economic Theory; Applied Economics; Banking; Finance and Investment;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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