Template-Type: ReDIF-Paper 1.0
Author-Name:  Sebastian Link
Author-Name-First: Sebastian
Author-Name-Last: Link
Author-Email: link@ifo.de
Author-Workplace-Name: ifo Institute, LMU Munich, IZA, CESifo
Author-Name:  Andreas Peichl
Author-Name-First: Andreas
Author-Name-Last: Peichl
Author-Email: peichl@econ.lmu.de
Author-Workplace-Name: LMU Munich, ifo Institute 
Author-Name:  Oliver Pfäuti
Author-Name-First: Oliver
Author-Name-Last: Pfäuti
Author-Email: pfaeuti.oliver@gmail.com
Author-Workplace-Name: University of Texas at Austin
Author-Name:  Christopher Roth
Author-Name-First: Christopher
Author-Name-Last: Roth
Author-Email: roth@wiso.uni-koeln.de
Author-Workplace-Name: University of Cologne, IZA, CESifo, CEPR, Max-Planck Institute for Behavioral Economics Bonn
Author-Name:  Johannes Wohlfart
Author-Name-First: Johannes
Author-Name-Last: Wohlfart
Author-Email: wohlfart@wiso.uni-koeln.de
Author-Workplace-Name: University of Cologne, Max-Planck Institute for Behavioral Economics Bonn, CEBI, CESifo

Title:   Attention to the Macroeconomy
Abstract: We measure which economic topics are top of mind using quarterly German household and firm panels from 2020 to 2024, a period that spans the post-pandemic inflation surge and the subsequent disinflation. With these data, we study the determinants and consequences of having inflation top of mind. In line with goal-directed attention, the likelihood that inflation is top of mind rises with proxies for its true payoff relevance. At the same time, prior experiences predict whether respondents have inflation and energy prices top of mind conditional on a large set of controls for payoff relevance, and this relationship becomes stronger when the environment becomes more inflationary. Having inflation top of mind predicts stronger increases in information acquisition and inflation expectations over the shock period. At odds with goal-optimality, having inflation top of mind is associated with expectations further away from multiple ex-ante benchmarks. Finally, both key determinants of having inflation top of mind—payoff relevance and prior experiences—are associated with stronger shifts of expectations away from these benchmarks over the shock period.
Length: 94 pages
Classification-JEL: D83, D84, E71
Keywords: Attention, Expectation formation, Memory, Experiences, Inflation

Creation-Date:  2023-09
File-URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_256_2023.pdf
File-Format: Application/pdf
File-Function: Fifth version, 2026
Number: 256
Handle: RePEc:ajk:ajkdps:256