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Monetary policy shocks and consumer expectations in the euro area

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  • Geiger, Martin
  • Gründler, Daniel
  • Scharler, Johann
Abstract
We study how consumers assess the effects of monetary policy shocks in euro area countries using survey data. Our findings provide evidence that consumers form expectations in a way that is broadly consistent with empirical and theoretical models of the monetary transmission mechanism, both at the aggregate level and at the country level. Although the euro area countries are characterized by economic and institutional heterogeneity, consumers' interpretations of the macroeconomic effects of monetary policy are relatively homogenous. Monetary policy is particularly effective in coordinating consumer price expectations, while the updating of unemployment expectations is more disperse across countries.

Suggested Citation

  • Geiger, Martin & Gründler, Daniel & Scharler, Johann, 2023. "Monetary policy shocks and consumer expectations in the euro area," Journal of International Economics, Elsevier, vol. 140(C).
    • Handle: RePEc:eee:inecon:v:140:y:2023:i:c:s0022199622001404
    DOI: 10.1016/j.jinteco.2022.103708
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    More about this item

    Keywords

    Macroeconomic expectations; FAVAR; Monetary policy; High-frequency identification;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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