US

Expectations, Policy and Growth

Question A:

When evaluating the consequences of any shifts in economic policy regimes, it is essential to consider potential changes in the behavior of economic agents due to revised expectations.

Responses weighted by each expert's confidence

Question B:

The empirical evidence on how monetary policy affects the economy in the short run is most consistent with the assumption that economic agents form rational expectations.

Responses weighted by each expert's confidence

Question C:

Economic research has established that the welfare consequences of differences in countries’ growth and level of development are substantially higher than the welfare costs of business cycles.

Responses weighted by each expert's confidence

Question A Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Agree
4
Bio/Vote History
My reading of the evidence is that major policy changes do shift expectations in some way. The exact manner may be complicated, but expect ational changes are important.
Altonji
Joseph Altonji
Yale Did Not Answer Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Strongly Agree
9
Bio/Vote History
Autor
David Autor
MIT
Strongly Agree
10
Bio/Vote History
Was this ever controversial? It might have been non-obvious. But once stated, it's hard to argue with. One could disagree about anticipated response magnitudes, of course.
Banerjee
Abhijit Banerjee
MIT
Agree
6
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
Strongly Agree
8
Bio/Vote History
Brunnermeier
Markus Brunnermeier
Princeton
Strongly Agree
9
Bio/Vote History
Chetty
Raj Chetty
Harvard Did Not Answer Bio/Vote History
Chevalier
Judith Chevalier
Yale
Strongly Agree
10
Bio/Vote History
Cutler
David Cutler
Harvard
Strongly Agree
7
Bio/Vote History
Deaton
Angus Deaton
Princeton
Strongly Agree
10
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Strongly Agree
10
Bio/Vote History
Edlin
Aaron Edlin
Berkeley
Strongly Agree
8
Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Agree
8
Bio/Vote History
Einav
Liran Einav
Stanford
Strongly Agree
1
Bio/Vote History
Fair
Ray Fair
Yale
Agree
5
Bio/Vote History
Finkelstein
Amy Finkelstein
MIT Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale Did Not Answer Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago
Strongly Agree
7
Bio/Vote History
Hall
Robert Hall
Stanford
Strongly Agree
8
Bio/Vote History
Along with all the other relevant factors
Hart
Oliver Hart
Harvard
Strongly Agree
7
Bio/Vote History
Holmström
Bengt Holmström
MIT
Strongly Agree
6
Bio/Vote History
Hoxby
Caroline Hoxby
Stanford
Strongly Agree
10
Bio/Vote History
Hoynes
Hilary Hoynes
Berkeley
Agree
8
Bio/Vote History
Judd
Kenneth Judd
Stanford
Strongly Agree
8
Bio/Vote History
Kaplan
Steven Kaplan
Chicago Booth
Agree
5
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Strongly Agree
7
Bio/Vote History
Klenow
Pete Klenow
Stanford
Strongly Agree
8
Bio/Vote History
Levin
Jonathan Levin
Stanford
Strongly Agree
6
Bio/Vote History
Maskin
Eric Maskin
Harvard
Agree
7
Bio/Vote History
Nordhaus
William Nordhaus
Yale Did Not Answer Bio/Vote History
Obstfeld
Maurice Obstfeld
Berkeley
Strongly Agree
7
Bio/Vote History
Saez
Emmanuel Saez
Berkeley
Agree
6
Bio/Vote History
Samuelson
Larry Samuelson
Yale
Strongly Agree
8
Bio/Vote History
Scheinkman
José Scheinkman
Columbia University
Strongly Agree
8
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
Strongly Disagree
8
Bio/Vote History
Shapiro
Carl Shapiro
Berkeley
Strongly Agree
9
Bio/Vote History
Shimer
Robert Shimer
University of Chicago
Strongly Agree
10
Bio/Vote History
Stock
James Stock
Harvard
Strongly Agree
5
Bio/Vote History
Thaler
Richard Thaler
Chicago Booth
Strongly Agree
3
Bio/Vote History
Udry
Christopher Udry
Northwestern
Strongly Agree
6
Bio/Vote History

Question B Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Disagree
4
Bio/Vote History
Rational expectations is a very useful benchmark. But there seems to be much heterogeneity and some systematic biases. E.g. it took a long while for inflationary expectations to adjust in Turkey after central bank lost independence and very low interest rate policy got cemented.
Altonji
Joseph Altonji
Yale Did Not Answer Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Uncertain
5
Bio/Vote History
Autor
David Autor
MIT
No Opinion
Bio/Vote History
Banerjee
Abhijit Banerjee
MIT
Uncertain
6
Bio/Vote History
Depends on what exactly we mean by rational expectations and by people. Bond traders do try to project government strategies based incentives and constraints but they often have systematic biases. In other words RE may be more useful as a concept than as a description of reality.
Bertrand
Marianne Bertrand
Chicago
No Opinion
Bio/Vote History
Brunnermeier
Markus Brunnermeier
Princeton
Uncertain
9
Bio/Vote History
Chetty
Raj Chetty
Harvard Did Not Answer Bio/Vote History
Chevalier
Judith Chevalier
Yale
Uncertain
3
Bio/Vote History
Cutler
David Cutler
Harvard
Uncertain
1
Bio/Vote History
Deaton
Angus Deaton
Princeton
Disagree
6
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Uncertain
4
Bio/Vote History
Agent rationality can often fail. The implications for monetary policy effectiveness are, for me, uncertain.
Edlin
Aaron Edlin
Berkeley
Strongly Disagree
9
Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Uncertain
5
Bio/Vote History
Einav
Liran Einav
Stanford
Agree
1
Bio/Vote History
Fair
Ray Fair
Yale
Disagree
5
Bio/Vote History
Finkelstein
Amy Finkelstein
MIT Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale Did Not Answer Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago
Agree
3
Bio/Vote History
Hall
Robert Hall
Stanford
Uncertain
3
Bio/Vote History
Hart
Oliver Hart
Harvard
Uncertain
5
Bio/Vote History
Holmström
Bengt Holmström
MIT
Disagree
4
Bio/Vote History
Hoxby
Caroline Hoxby
Stanford
Uncertain
6
Bio/Vote History
Hoynes
Hilary Hoynes
Berkeley
No Opinion
Bio/Vote History
Judd
Kenneth Judd
Stanford
Agree
6
Bio/Vote History
Kaplan
Steven Kaplan
Chicago Booth
No Opinion
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Disagree
7
Bio/Vote History
Rational expectations are the right place to start, but the empirical models of monetary transmission (and especially of inflation dynamics) have a very hard time telling whether price setters are backward looking or forward looking
-see background information here
Klenow
Pete Klenow
Stanford
Agree
5
Bio/Vote History
Levin
Jonathan Levin
Stanford
Uncertain
5
Bio/Vote History
Maskin
Eric Maskin
Harvard
No Opinion
Bio/Vote History
don't know enough to comment
Nordhaus
William Nordhaus
Yale Did Not Answer Bio/Vote History
Obstfeld
Maurice Obstfeld
Berkeley
Disagree
6
Bio/Vote History
Saez
Emmanuel Saez
Berkeley
Uncertain
4
Bio/Vote History
Samuelson
Larry Samuelson
Yale
Uncertain
1
Bio/Vote History
Whether people exhibit rational expectations is difficult to separate from other explanations.
Scheinkman
José Scheinkman
Columbia University
Agree
6
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
No Opinion
Bio/Vote History
Shapiro
Carl Shapiro
Berkeley
Disagree
8
Bio/Vote History
Shimer
Robert Shimer
University of Chicago
Agree
5
Bio/Vote History
In response to monetary policy shocks, agents revise their expectations about the state of the economy, consistent with rational expectations. There is less evidence on how systematic monetary policy rules affect expectations.
Stock
James Stock
Harvard
Disagree
5
Bio/Vote History
Thaler
Richard Thaler
Chicago Booth
Uncertain
1
Bio/Vote History
Whose expectations? How measured?
Udry
Christopher Udry
Northwestern
Uncertain
2
Bio/Vote History

Question C Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Strongly Agree
8
Bio/Vote History
The only caveat is really dysfunctional monetary policy and hyperinflation leading to conflict and loss of state capacity, then impacting medium-term growth.
Altonji
Joseph Altonji
Yale Did Not Answer Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Agree
7
Bio/Vote History
Autor
David Autor
MIT
Agree
8
Bio/Vote History
I'm pretty certain of this based on first principles
Banerjee
Abhijit Banerjee
MIT
Agree
6
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
Agree
5
Bio/Vote History
Brunnermeier
Markus Brunnermeier
Princeton
Agree
9
Bio/Vote History
Chetty
Raj Chetty
Harvard Did Not Answer Bio/Vote History
Chevalier
Judith Chevalier
Yale
Agree
8
Bio/Vote History
Cutler
David Cutler
Harvard
Agree
6
Bio/Vote History
Deaton
Angus Deaton
Princeton
Disagree
6
Bio/Vote History
Too narrow a definition of welfare. People hurt by business cycles can come for us with pitchforks in a way that poor people in Burkina Faso do not.
Duffie
Darrell Duffie
Stanford
Agree
3
Bio/Vote History
Edlin
Aaron Edlin
Berkeley
Strongly Agree
8
Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Agree
5
Bio/Vote History
Einav
Liran Einav
Stanford
Agree
1
Bio/Vote History
Fair
Ray Fair
Yale
Disagree
5
Bio/Vote History
Finkelstein
Amy Finkelstein
MIT Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale Did Not Answer Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago
Strongly Agree
8
Bio/Vote History
Hall
Robert Hall
Stanford
Strongly Agree
10
Bio/Vote History
Read Hall and Jones
-see background information here
Hart
Oliver Hart
Harvard
Uncertain
5
Bio/Vote History
Holmström
Bengt Holmström
MIT
Strongly Agree
5
Bio/Vote History
Hoxby
Caroline Hoxby
Stanford
Strongly Agree
10
Bio/Vote History
Hoynes
Hilary Hoynes
Berkeley
No Opinion
Bio/Vote History
Judd
Kenneth Judd
Stanford
Agree
8
Bio/Vote History
Kaplan
Steven Kaplan
Chicago Booth
No Opinion
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Agree
5
Bio/Vote History
Klenow
Pete Klenow
Stanford
Strongly Agree
10
Bio/Vote History
Levin
Jonathan Levin
Stanford
Strongly Agree
8
Bio/Vote History
Maskin
Eric Maskin
Harvard
Agree
7
Bio/Vote History
Nordhaus
William Nordhaus
Yale Did Not Answer Bio/Vote History
Obstfeld
Maurice Obstfeld
Berkeley
Uncertain
7
Bio/Vote History
Saez
Emmanuel Saez
Berkeley
Agree
4
Bio/Vote History
Samuelson
Larry Samuelson
Yale
Agree
8
Bio/Vote History
The spread of performance across countries is much larger than the spread across time within countries.
Scheinkman
José Scheinkman
Columbia University
Strongly Agree
8
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
Strongly Agree
7
Bio/Vote History
Not sure you need economic research to see this, but you do need to decide how to measure aggregate welfare.
Shapiro
Carl Shapiro
Berkeley
Agree
7
Bio/Vote History
Shimer
Robert Shimer
University of Chicago
Strongly Agree
7
Bio/Vote History
Stock
James Stock
Harvard
Agree
5
Bio/Vote History
Thaler
Richard Thaler
Chicago Booth
Uncertain
3
Bio/Vote History
Udry
Christopher Udry
Northwestern
Strongly Agree
7
Bio/Vote History
It's more arithmetic than economics...