Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/232543
Authors: 
D'Acunto, Francesco
Hoang, Daniel
Paloviita, Maritta
Weber, Michael
Year of Publication: 
2021
Series/Report no.: 
KIT Working Paper Series in Economics No. 147
Abstract: 
Communication targeting households and firms has become a stand-alone policy tool of many central banks. But which forms of communication, if any, can reach ordinary people and manage their economic expectations effectively? In a large-scale randomized control trial, we show that communication manages expectations when it focuses on policy targets and objectives rather than on the instruments designed to reach such objectives. It is especially the least sophisticated demographic groups, which central banks typically struggle to reach, who react more to target-based communication. When exposed to target-based communication, these groups are also more likely to believe that policies will benefit households and the economy. Target-based communication enhances policy effectiveness and contributes to strengthen the public's trust in central banks, which is crucial to guarantee the credibility of their policies.
Subjects: 
Behavioral Macroeconomics
Heterogeneous Beliefs
Limited Cognition
Expectations Formation
Household Finance
JEL: 
D12
D84
D91
E21
E31
E32
E52
E65
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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