Managing Consumer Expectations with the Truth

Over the past few years a number of central bankers and economists have been suggesting that rather than trying to send signals via rate moves, perhaps speaking directly to consumers will work to sway the economy.

According to Boston College’s Francesco D’Acunto, Karlsruhe Institute of Technology’s Daniel Hoang, Bank of Finland’s Maritta Paloviita, and Chicago Booth’s Michael Weber bluntly stating what monetary authorities are trying to accomplish can have the desired effect on people’s expectations and their resulting behavior. While, just divulging the arcane policy details of how they’re trying to reach a goal doesn’t work according to their research.