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Field
Trial Title
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Before
Macroeconomic Expectations and Belief Updating
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After
Does the Messenger of Central Bank Communication Matter? Effects on Belief Updating.
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Abstract
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Before
This paper studies primarily individuals' expectations, updates to their expectations, and their sentiment about institutions and the economy.
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After
Central bank communication has been used as a monetary policy tool to - amongst others - influence inflation expectations. This paper studies whether the source (i.e. the messenger) of central bank communication matters for communication to be effective. Further, this trial looks into the existence of potential "ingroup" effects, where the effectiveness of communication is altered because of shared attributes of the receiver and messenger of the communication.
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JEL Code(s)
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Before
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After
E31, E58
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Last Published
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Before
January 09, 2023 05:33 PM
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After
October 31, 2023 11:33 AM
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Intervention End Date
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Before
October 31, 2023
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After
March 31, 2024
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Primary Outcomes (End Points)
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Before
1) Short Survey: inflation expectations and variance, sentiments towards monetary policy (institution), economy, inflation
2) RCT: Economic Forecast (prior), Economic Forecast Revision after treatment (posterior), institutional trust and knowledge
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After
Signal uptake;
Similarly: Extent of Bayesian Updating
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Primary Outcomes (Explanation)
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Before
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After
Signal uptake: measured as the extent to which the signal is used participants' inflation forecast revisions (i.e. in their posteriors, after treatment);
Extent of Bayesian Updating: i.e., how rational/close to the rational posterior the updated inflation forecasts are
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Experimental Design (Public)
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Before
A short survey, as well as an information treatment survey experiment are run to test how individuals form and update economic expectations.
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After
An RCT run via Prolific to test how individuals update inflation expectations, given information by different messengers.
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Randomization Method
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Before
1) Short Survey: no treatment, so no treatment randomisation; only some randomisation component done by computer regarding question on some extra information
2) RCT: Randomisation done by the computer (potentially via a survey company)
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After
Randomisation done by the computer (via a randomisation algorithm)
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Randomization Unit
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Before
1) Short Survey: individual.
2) RCT: individual.
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After
Individual: Subjects participated individually. We deployed our experiment online via Prolific.
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Planned Number of Clusters
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Before
1) n/a
2) RCT: 2-4 nationalities
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After
n/a (4 nationalities)
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Planned Number of Observations
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Before
for Short Survey: at least 100 Twitter users, up to 500
for the RCT: at least 100 participants per nationality, up to 500 per nationality
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After
at least 100 participants per nationality (400 in total), ideally at least 200 per nationality given extra funding availability (800 in total)
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Sample size (or number of clusters) by treatment arms
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Before
1) Short Survey: at least 20 Twitter users by language (5 languages) - no treatment
2) RCT: at least 50 participants per treatment (2 treatments) and per nationality (2-4 languages)
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After
at least 400 participants per (nationality-pooled) treatments (within-subject design);
splitting by nationality (participant or outgroup nationality) this will fall accordingly
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Additional Keyword(s)
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Before
Macroeconomics, Monetary Policy
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After
Macroeconomics, Monetary Policy Communication, Inflation Expectations.
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Intervention (Hidden)
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Before
There are two parts to the analysis:
1) A Short Survey that is sent out via Twitter. The purpose is to elicit economic expectations and their uncertainty, as well as users' sentiments about institutions and policy.
2) The RCT: An information experiment via survey with participants from different EA nationalities. Their core task is to perform macroeconomic forecasting (e.g. inflation prediction, GDP, unemployment rate). The treatment consists of a randomly varying source of information that helps participants with the forecasting task. The outcome of interest is the extent to which this information (i.e. signal) is integrated into individuals' (Bayesian) Updating of their forecasts (i.e. beliefs).
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After
At the core of this study is an information experiment (RCT) with participants from different EA nationalities (DE, FR, IT, ES) who also reside in the respective countries. After being presented with historic 10 periods of annual inflation, participants forecast the next period of Euro area inflation in multiple different forecasting tasks. After submitting a first forecast, participants are given professional inflation forecasts and additional information that helps participants with the forecasting task. The treatment consists of a randomly varying source (i.e. the messenger) of additional information. Messenger treatments vary along nationality and institutional dimensions of the information source. After this, participants submit an updated inflation forecast. The outcome of interest is the extent to which participants update their inflation expectations in a Bayesian manner, particularly the extent to which they update towards the signal of the provided information/forecast (representing central bank communication), and whether/how this varies across messengers.
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Secondary Outcomes (End Points)
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Before
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After
1) Attention to provided analyses (i.e. central bank communication) of the messengers.
2) Exposure and trust of institutions and (examples of) policymakers that are similar to the generic treatments in the trial.
3) Other differences: across nationalities, levels of monetary policy expertise
4) Effects on uncertainty
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Secondary Outcomes (Explanation)
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Before
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After
1)+2) To better understand potential mechanisms to heterogeneous belief updating, participants' attention to information, as well as trust and exposure to similar policymakers are being elicited. Here, exposure is how well institutions and policymakers are known, and how regularly news about them are followed.
3) Sample splits by participant nationality (requires final sample to be large enough to ensure enough power), and level of self-reported extent of following key monetary policy announcements (to compare across financial expertise levels, and compare to some observational results)
4) Both, within-subject change in forecast uncertainty before and after information provision, and between-subject "disagreement" before and after information provision.
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