Breaking the monetary financing taboo: are we ready or are we opening the Pandora’s box?

An online household survey is conducted in three countries and two waves with the help of a large international marketing research company. The respondents are representative of the general population in terms of gender, age, education level, geographic location, and, as much as possible, income. We use a between-subject design to evaluate how different pieces of information may alter respondents' beliefs and opinions about fiscal policy options and knowledge about public finances.

2021-12-01

2022-03-31

There are three main end points: i) the fiscal literacy score (overall knowledge of public finances), between 0 and 5; ii) the support for exceptional monetary financing as evidenced by the fraction of people declaring to support such a policy, and iii) the support for central bank independence, as evidenced by the fraction of people willing to sign the corresponding petition.

The "fiscal literacy" score consists in the aggregation of the correct answers out of the five knowledge questions on the matter. The rest of the measurements does not require any transformation of the collected variables.

We are also looking at i) people's opinions about debt financing versus monetary financing options, as reported in the open-ended questions; and ii) expectations about the effects of these financing options on future inflation and taxes, as evidenced by the answers to the corresponding thought experiments.

One control group and four treatments are designed, in a 2-by-2 + 1 design where we vary the information that is presented or not to the respondents, in terms of quantity, source and medium of communication. The two main treatment variables are i) the presence or absence of an educational video about taxes, public debt and monetary financing; and ii) the presence or absence of a central bank communication piece arguing against monetary financing. The control group corresponds to the case where the respondents do not see any piece of information (neither the educational video, nor the central bank's piece). The additional treatment considers a newspaper piece from a famous economist arguing for a one-time monetary financing operation in the wake of the COVID-19 pandemic in 2020, on top of the display of the video and the central bank piece.

Not available

Computerized randomization at the beginning of the questionnaire, one draw for each respondent (outsourced to the marketing research company).

individual (survey respondents)

No

No cluster

2200 in Italy, 2200 in the Netherlands and 4000 in France for the first wave; 2800 in France for the second wave (foreseen, depending on the recontact rate).

1680 observations per treatment (8400/5)

The minimum detectable effect size depends on the fraction of inattentive respondents that will be discarded out of the 1680 observations per treatment. Assuming less than 5% of the respondents are discarded (based on pilot data), we are left with about 1600 per treatment. Assuming a 80% power and a 5% threshold for the normal distribution: - A 5 percentage point cross-treatment difference in a dichotomous variable shall be detectable (ex: 20 vs 25% of people signing the petition between two treatments: [(0.2*0.8+0.25*0.75)/sqrt(0.05^2)]*7.9 = 1,100 per treatment). an effect size of 5p.p. between 20% and 25% across two treatments is detectable, a 4% is not (would need 1690 subjects). - For a continuous outcome, for instance in the knowledge score, a difference as small as 0.12 (score from 0 to 5), with a standard deviation of 1.2 (based on pilot data) should be detectable (7.9*2/((0.12/1.2)^2)=1,580). With a standard deviation of up to 2, the difference shall be at least 0.2 to be detectable (1,580 respondents).