As evidence is accumulating that subjective expectations influence behavior and that these expectations are sometimes biased, it becomes policy-relevant to know how to influence individuals' expectations. Information in the media is likely to affect how people picture the future. This paper...

Central bank communication plays an important role in shaping market participants’ expectations. This paper studies a simple nonlinear model of monetary policy in which agents have incomplete information about the economic environment. It shows that agents’ learning and the dynamics of the...

Attempts by governments to stop bubbles by issuing warnings seem unsuccessful. This paper examines the effects of public warnings using a simple model of riding bubbles. We show that public warnings against a bubble can stop it, if investors believe that a warning is issued in a definite range...

This paper provides original empirical evidence on the emerging practice by central banks of communicating uncertainty in their inflation projections. We compare the effects of point and density projections in a learning-to-forecast laboratory experiment where participants' aggregated...

About half of professional forecasters report that they use the natural rate of unemployment (u*) to forecast. I show that forecasters' reported use of and estimates of u* are informative about their expectations-formation process, including their use of a Phillips curve. Those who report not...

Attempts by governments to stop bubbles by issuing warnings seem unsuccessful. This paper examines the effects of public warnings using a simple model of riding bubbles. We show that public warnings against a bubble can stop it if investors believe that a warning is issued in a definite range of...

Central bank communication plays an important role in shaping market participants' expectations. This paper studies a simple nonlinear model of monetary policy in which agents have incomplete information about the economic environment. It shows that agents' learning and the dynamics of the...

We leverage the small open economy Switzerland as a testing ground for basic premises of macroeconomic models of endogenous information acquisition, using tailored surveys of firms and households. First, we show that firms perceive a greater exposure to exchange rate movements than households,...

Households were surveyed in the days immediately before and after the June release of the Consumer Price Index (CPI). The CPI release was associated with an 11 percentage point increase in the likelihood that a respondent heard news about inflation, with a larger increase for highly-numerate...