Informing businesses of policymakers' views on inflation uncertainty

Last registered on January 07, 2022
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Pre-Trial

Trial Information

General Information

Title
Informing businesses of policymakers' views on inflation uncertainty
RCT ID
AEARCTR-0008741
Initial registration date
December 22, 2021

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 07, 2022, 8:17 PM EST

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

Locations

Country
United States of America
Region
6th Federal Reserve District

Primary Investigator

Name
Brent Meyer
Affiliation
Federal Reserve Bank of Atlanta
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Nicholas Parker
PI Affiliation
Federal Reserve Bank of Atlanta
Contact Investigator
PI Name
Kevin Foster
PI Affiliation
Federal Reserve Bank of Atlanta
Contact Investigator

Additional Trial Information

Status
Completed
Start date
2020-10-05
End date
2020-11-13
Keywords
Behavior, Firms & Productivity
Additional Keywords
Inflation expectations and uncertainty; firms' unit cost expectations
JEL code(s)
E6, E31, E52, L2
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In October 2020, we asked firms for their highest and lowest potential expectations for PCE inflation in 2021. In this experiment, we wanted to test whether giving business decision makers information on the uncertainty (in the form of confidence intervals) around monetary policymakers’ projections influenced their inflation projections in October, and to see if this information impacted firms’ own unit cost expectations over the year ahead a month later in November 2020. To make sure that the information we were supplying was about the second moment only, we provided both the control and the treatment groups with the median expectation for PCE inflation over calendar year 2021 from the FOMC’s Summary of Economic Projections on September 15, 2020. For the treatment group we provided the 70 percent confidence interval around those projections based on the historical forecast errors of professionals (excerpted from the minutes of the September 2020 FOMC meeting).
External Link(s)

Registration Citation

Citation
Foster, Kevin, Brent Meyer and Nicholas Parker. 2022. "Informing businesses of policymakers' views on inflation uncertainty." AEA RCT Registry. January 07. https://doi.org/10.1257/rct.8741-1.0
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Experimental Details

Interventions

Intervention(s)
Target group: C-suite executives and business owners (panelists) in the Atlanta Fed's Business Inflation Expectations Survey.

In October 2020, we asked firms for their highest and lowest potential expectations for PCE
inflation in 2021. In this experiment, we wanted to test whether giving business decision makers
information on the uncertainty (in the form of confidence intervals) around monetary policymakers’
projections influenced their inflation projections in October, and to see if this information impacted
firms’ own unit cost expectations over the year ahead a month later in November 2020. To make
sure that the information we were supplying was about the second moment only, we provided both
the control and the treatment groups with the median expectation for PCE inflation over calendar
year 2021 from the FOMC’s Summary of Economic Projections on September 15, 2020. For the
treatment group we provided the 70 percent confidence interval around those projections based on
the historical forecast errors of professionals (excerpted from the minutes of the September 2020
FOMC meeting).

Specifically, we asked
"The median expectation of monetary policymakers for inflation over calendar year 2021 was 1.7 percent (as of September 15th). [Treatment: Based on forecasts over the past
20 years, there is a 70 percent chance that actual inflation will be in the range of 0.7
percent to 2.7 percent over calendar year 2021.] What is your best estimate for the
highest and lowest potential rate of inflation over calendar year 2021?"

The treatment and supplied information came from the supporting documentation from the September 2020 FOMC meeting, which had concluded just weeks prior to the beginning of our survey period.

In the attached documentation, we show that firms' expectations and uncertainty for PCE inflation in 2021 and, importantly, for firms' unit cost expectations and uncertainty were largely unaffected.



Intervention Start Date
2020-10-05
Intervention End Date
2020-10-09

Primary Outcomes

Primary Outcomes (end points)
The key outcome variables of interest are firms' 1-year ahead unit cost expectations and uncertainty, and firms' expectations and confidence interval for year-ahead PCE inflation.
Primary Outcomes (explanation)
The primary outcome is to see if the treatment has a discern impact on any of the key outcome variables of interest.

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The experimental design is a simple RCT. Respondents to the October 2020 BIE survey are chosen at random to receive treatment. There are only two groups: treatment and control.

The target sample group is between 200-225 respondents.

Experimental Design Details
Randomization Method
Randomization done in office by computer using Qualtrics survey software.
Randomization Unit
Firm-level (respondents are c-suite execs, business owners, or financial professionals).
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
Approximately 200-225 firms.
Sample size: planned number of observations
200-225
Sample size (or number of clusters) by treatment arms
100-113 firms in both the control and treatment group
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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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