Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235339 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 8969
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
We leverage survey data from Germany, Italy, and the US to document several novel stylized facts about the extent of information frictions among firms and households. First, firms’ expectations about the central bank policy rate, inflation, and aggregate unemployment are more aligned with expert forecasts and less dispersed than households’. Second, there is substantially more heterogeneity in information frictions within households than within firms. Third, consistent with firms having stronger priors, they update their policy rate expectations significantly less compared to households when provided with an expert forecast. Our results have important implications for modeling heterogeneity in macroeconomic models.
Subjects: 
information frictions
firms
households
expectation formation
interest rates
JEL: 
D83
D84
E71
Document Type: 
Working Paper
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