Government Debt and Inflation Expectations: Evidence from Firms

Last registered on January 02, 2024
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Pre-Trial

Trial Information

General Information

Title
Government Debt and Inflation Expectations: Evidence from Firms
RCT ID
AEARCTR-0012558
Initial registration date
December 28, 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 02, 2024, 10:58 AM EST

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

Locations

Country
Germany
Region

Primary Investigator

Name
Nils Wehrhöfer
Affiliation
Deutsche Bundesbank
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Other Primary Investigator(s)

PI Name
Renato Faccini
PI Affiliation
Danmarks Nationalbank
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PI Name
Francesco Bianchi
PI Affiliation
Johns Hopkins University
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PI Name
Leonardo Melosi
PI Affiliation
University of Warwick
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Additional Trial Information

Status
In development
Start date
2024-01-04
End date
2024-03-31
Keywords
Firms & Productivity
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We plan to test whether firms take government debt in the Eurozone into account when forming their inflation expectations. The fiscal theory of the price level suggests that economic agents believe that higher levels of government debt lead to higher inflation expectations since the monetary authority is also concerned with reducing the debt burden of the government. We plan to inform random subsets of German firms with different scenarios for the future path of government debt in France, Italy and Spain. Informing firms about non-German debt allows us to isolate the effect of higher debt levels through the monetary authority only since German firms are affected by ECB policy, but not directly by potential fiscal measures of the French, Italien and Spanish government.
External Link(s)

Registration Citation

Citation
Bianchi, Francesco et al. 2024. "Government Debt and Inflation Expectations: Evidence from Firms ." AEA RCT Registry. January 02. https://doi.org/10.1257/rct.12558-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2024-01-04
Intervention End Date
2024-03-31

Primary Outcomes

Primary Outcomes (end points)
Qualitative and quantitative debt-to-gdp expectations within the next five years; quantitative inflation expectations over the next twelve months, three years and five years; quantitative firm expectations of prices, employment, investment and wages; qualitative tax and spending expectations over the next five years; growth rate expectations over the next five years; qualitative expectations about the likelihood of a souvereign debt crisis, the ECB not raising rates due to concerns about government budgets and Euro-Bonds.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We plan to provide random subsets of German firms with the different projections of French, Italian and Spanish debt-to-GDP ratios from the European Comission. One group will receive an optimistic projection based on the average path of the 10th percentile of forecasted debt-to-GDP ratio, one group will receive a pessemistic projection based on the average path of the 10th percentile of forecasted debt-to-GDP ratio, one group will receive the pessemistic projection with additional information on the reasons why the European Comission is worried about their debt projections.
Experimental Design Details
Randomization Method
Randomization is done by the survey provider using a computer.
Randomization Unit
Randomization takes place at the firm level.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
About 9000 firms
Sample size: planned number of observations
About 9000 firms
Sample size (or number of clusters) by treatment arms
We have 3 equally-sized treatment groups each numbering about 3000 firms.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

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