Interest Rate Expectations and Economic Behavior
Our research is of key interest for policy makers because it provides causal evidence on how households and firms change their expectations and behavior in response to unconventional monetary policy. Our project will also shed light on which subgroups of the population can be expected to react most strongly to changes in their expectations about future interest rates, and should therefore be targeted by monetary policy communication. This could help in designing policy interventions that make monetary policy more effective. Finally, expectations about future interest rates should generally be relevant for the decisions of households and firms, and not only when they are shifted by policymakers through communication. Thus, studying the effects of interest rate expectations helps to better understand individual behavior and ultimately aggregate dynamics.
Read the full project description here