The Effects of Monetary Policy: Theory with Measured Expectations

Last registered on January 23, 2023

Pre-Trial

Trial Information

General Information

Title
The Effects of Monetary Policy: Theory with Measured Expectations
RCT ID
AEARCTR-0010735
Initial registration date
January 06, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
January 23, 2023, 5:55 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Region

Primary Investigator

Affiliation
University of Cologne

Other Primary Investigator(s)

PI Affiliation
PI Affiliation

Additional Trial Information

Status
Completed
Start date
2021-03-03
End date
2022-09-21
Secondary IDs
Prior work
This trial is based on or builds upon one or more prior RCTs.
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 monetary 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% on impact and an interest rate hike of 40 basis points in March 2022 would have reduced aggregate consumption by 0.30% on impact.
External Link(s)

Registration Citation

Citation
Roth, Christopher, Mirko Wiederholt and Johannes Wohlfart. 2023. "The Effects of Monetary Policy: Theory with Measured Expectations ." AEA RCT Registry. January 23. https://doi.org/10.1257/rct.10735-1.0
Experimental Details

Interventions

Intervention(s)
Respondents complete different hypothetical vignettes about future paths of the federal funds rate.
Intervention (Hidden)
Intervention Start Date
2021-03-04
Intervention End Date
2022-09-21

Primary Outcomes

Primary Outcomes (end points)
Income Expectations, Interest Expectations, and Inflation Expectations
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We employ a within design in which participants state their expectations under a baseline monetary policy scenario and a counterfactual policy scenario.

We also cross-randomize between subjects the reason for the policy change. Some respondents learn about an endogenous increase in the federal funds rate; other learn about an exogenous increase; others learn about an exogenous increase and are also informed about the subsequent movements in stock prices; finally, the remaining respondents do not receive an explanation for the change in interest rate policy.
Experimental Design Details
Randomization Method
Individual
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
2000
Sample size: planned number of observations
2000
Sample size (or number of clusters) by treatment arms
2000 respondents in the baseline scenario and 2000 respondents in the alternative scenario.
500 in the endogenous increase arm
500 in the exogenous increase arm
500 in the exogenous + stock movement arm
500 in the no-reason arm
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
ethics approval from the University of Warwick
IRB Approval Date
2020-02-05
IRB Approval Number
(HSSREC 90/20-21)

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials