Fiscal announcements may transfer information about the government’s view of the macroeconomic outlook to the private sector, diminishing the effectiveness of fiscal policy as a stabilization tool. We construct a novel dataset that combines daily data on Japanese stock prices with narrative...

Fiscal announcements may transfer information about the government's view of the macroeconomic outlook to the private sector, diminishing the effectiveness of fiscal policy as a stabilization tool. We construct a novel dataset that combines daily data on Japanese stock prices with narrative...

This study empirically investigates whether macroeconomic effects of fiscal policy are affected by the existence of rule-of-thumb households in Japan. Motivated by existing theoretical formulations, we estimate a consumption function as extended to a Markov switching model and divide the sample...