How does the general population interpret macroeconomic developments? As expectations influence economic decisions and thus savings, consumption and investment behaviour, the interpretation of macroeconomic developments influences the spread of economic shocks. Using survey data, we show how expectations react to different economic shocks.
The focus is currently on the research project "The Condition-Dependent Effects of Monetary and Fiscal Policy on Expectations", which is funded by the Jubilee Fund of 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 measures. 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.
Project start: 2019