Heterogeneity in macroeconomic expectations: theory, evidence, and implications

Thesis

This thesis examines the origins of heterogeneity in macroeconomic expectations, particularly inflation expectations, and its impact on economic behavior and the transmission of monetary policy. Drawing on theory and rich microdata from household, firm and expert surveys across multiple countries, I provide an integrated perspective on expectation formation mechanisms and their implications.

I begin by exploring one specific dimension of heterogeneity: the gender gap in inflation expectations. The first chapter argues that differences in forecast confidence, rather than exposure to specific prices, account for why women, on average, report higher inflation expectations than men. I then proceed to investigate the consequences of this gap, demonstrating first how gendered beliefs shape wage bargaining behavior (Chapter 2) and secondly how they influence trust in and responsiveness to central bank communication (Chapter 3).

Broadening the scope, the final chapter compares inflation expectations between different types of economic agents: households, firms, social partners, and economists. I find systematic differences in levels, dispersion, and sensitivity to shocks which highlight the limitations of representative-agent assumptions and underscore the need for more inclusive, behaviorally informed approaches to monetary policy design.

Taken together, the chapters highlight the importance of expectation heterogeneity not only for understanding inflation dynamics but also for addressing distributional concerns and improving central bank communication.

Authors: Reiche, L

• DOI: 10.5287/ora-yxyb0q1mr
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English
• Keywords: financial literacy; gender; macroeconomic expectations; labor economics
• Subjects: Households