The causal effects of central bank communication on economic expectations and their underlying mechanisms are tested in controlled laboratory experiments. We find that central bank communication has a stabilizing effect on individual and aggregate outcomes, and the size of the effect varies with...

In an earlier paper (Blinder and Morgan, 2005), we created an experimental apparatus in which Princeton University students acted as ersatz central bankers, making monetary policy decisions both as individuals and in groups. In this study, we manipulate the size and leadership structure of...

This paper reports an experimental investigation of a trust game using either cash or class credit as incentives to participants. We recruit from two auditorium classes. In one class, each token has cash value; in the other, each token is worth extra-credit points added to the students' overall...

At the beginning of the 18th century, Sweden was an imperial power that had just sustained a century of modest economic growth. In 1800, Sweden's empire was gone, after a series of military defeats. Real GDP per capita had fallen to the same level as the early 1600s. In other words, the 18th...

Using laboratory experiments within a New Keynesian framework, we explore the interaction between the formation of inflation expectations and monetary policy design. The central question in this paper is how to design monetary policy when expectations formation is not perfectly rational....