Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/187768
Authors: 
Roth, Christopher
Wohlfart, Johannes
Year of Publication: 
2018
Series/Report no.: 
IMFS Working Paper Series 128
Abstract: 
Using a representative online panel from the US, we examine how individuals' macroeconomic expectations causally affect their personal economic prospects and their behavior. To exogenously vary respondents' expectations, we provide them with different professional forecasts about the likelihood of a recession. Respondents update their aggregate economic outlook in response to the forecasts, extrapolate to expectations about their personal economic circumstances and adjust their consumption behavior and stock purchases. Extrapolation to expectations about personal unemployment is driven by individuals with higher exposure to macroeconomic risk, consistent with sticky information models in which people are inattentive, but understand how the economy works.
Subjects: 
Expectation Formation
Information
Updating
Aggregate Uncertainty
Macroeconomic Conditions
JEL: 
D12
D14
D83
D84
E32
G11
Document Type: 
Working Paper
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