Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271860 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10216
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study the effects of monetary policy on aggregate consumption combining a heterogeneous agent model with measured expectations under different policy counterfactuals. We express the consumption of non-hand-to-mouth households as a function of expectations only and elicit all expectations appearing in the consumption functions for alternative policy scenarios with tailored surveys. Feeding these individual-level expectations into the model illustrates that a modest forward guidance statement in March 2021 would have reduced aggregate consumption by 0.14 percent on impact and an interest rate hike of 40 basis points in March 2022 would have reduced aggregate consumption by 0.30 percent on impact.
Subjects: 
monetary policy
expectation formation
aggregate consumption
JEL: 
D12
D14
D83
D84
E32
G11
Document Type: 
Working Paper
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