Inflation expectations of households and firms are central determinants in all dynamic macro models. Yet, empirical evidence suggests these decision makers form expectations in a way that deviates from the assumptions in these models: on average, inflation expectations are biased upwards, are...

We test whether natives correctly assess the effects of immigration on their own labour market opportunities. We relate self-reported job loss and job finding probabilities to the presence of foreign-born residents in a native's neighborhood. We interpret coefficient estimates through the lens...

Many studies documented that actual asset-price movements exhibit momentum and reversion to fundamentals. We study real estate markets and find that households' subjective house-price expectations capture momentum but not reversion to fundamentals. Moreover, if current house prices are deviated...

Quarterly indices of output like those of Industrial Production, other measures of production like net sales, exports, of companies for which data is available, besides proxies like credit to the sector, and indices of price levels have been used to forward project the growth rates of GDP04-05,...

We integrate a high-frequency monetary event study into a mixed-frequency macro-finance model and structural estimation. The model and estimation allow for jumps at Fed announcements in investor beliefs, providing granular detail on why markets react to central bank communications. We find that...

We document a new fact: in U.S., European and Japanese surveys, households do not expect deflation, even in environments where persistent deflation is a strong possibility. This fact stands in contrast to the standard macroeconomic models with rational expectations. We extend a standard New...

We incorporate tail risk in a Bayesian learning framework with information frictions and study how individuals' expectations respond to first and second moment shocks. In our model, we retain "rational news" through Bayesian learning and abstract from any behavioral biases. First, we show that...