Expectations and the business cycle

Main Research Area:
Research Area:

How does the general public interpret macroeconomic developments? As expectations influence economic decisions and thus savings, consumption and investment behaviour, the interpretation of macroeconomic developments affects the propagation of economic shocks. Using survey data, we study how expectations react to different economic shocks.


The focus is currently on the research project “The State-Dependent Effects of Monetary and Fiscal Policy on Expectations”, which is funded by the Austrian National Bank and is being conducted by Martin Geiger (Liechtenstein Institute) together with Johann Scharler (University of Innsbruck) and Marios Zachariadis (University of Cyprus). In this project, the effects of monetary and fiscal policy on expectations are empirically investigated. Of particular interest is the influence of government debt on the expected effects of these economic policy shocks. Both monetary and fiscal policy affect public debt and its financing, especially when public debt is already high. If the population anticipates this, the effects of fiscal and monetary policy on expectations will vary according to the level of existing debt.


In addition, also other aspects of expectation formation of consumers as well as economic experts in reaction to macroeconomic developments are scrutinized in several other research projects.


Project start: 2019