<div class="csl-bib-body">
<div class="csl-entry">Branch, W., Gasteiger, E., & Grimaud, A. B. P. (2025, September 11). <i>Data-driven Narratives and Monetary Policy</i> [Conference Presentation]. Workshop on Heterogeneous Macro Expectations – New Evidence and Theory 2025, Erlangen, Germany. http://hdl.handle.net/20.500.12708/224271</div>
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dc.identifier.uri
http://hdl.handle.net/20.500.12708/224271
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dc.description.abstract
This paper develops a framework for analyzing how economic agents form and use simplified causal narratives to understand and forecast macroeconomic dynamics, with specific application to monetary policy. We introduce data-driven narratives that satisfy internal consistency through cross-equation restrictions while potentially remaining misspecified. Applying this approach to a Fisherian model with average inflation targeting (AIT), we decompose belief distortions into extrinsic bias, intrinsic bias, and model-selection bias. We demonstrate that policy transparency fundamentally influences equilibrium determination: transparent AIT tends toward unique equilibria, while intentionally ambiguous AIT can generate multiple equilibria with different dominant narratives. The effectiveness of AIT critically depends on the persistence structure of underlying shocks and which narratives prevail. Our empirical analysis of U.S. data (1960-2019) reveals that demandfocused narratives have historically dominated. This helps explain why the Federal Reserve’s 2020 adoption of AIT may not generate the anticipated “make-up” dynamics essential to the policy’s success.
en
dc.description.sponsorship
Österreichische Nationalbank, Jubiläumsfonds
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dc.language.iso
en
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dc.subject
Data-driven narratives
en
dc.subject
monetary policy
en
dc.title
Data-driven Narratives and Monetary Policy
en
dc.type
Presentation
en
dc.type
Vortrag
de
dc.contributor.affiliation
University of California, Irvine, United States of America (the)
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dc.relation.grantno
18611
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dc.type.category
Conference Presentation
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tuw.project.title
Should central banks modify their inflation targeting framework when agents are boundedly rational?
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tuw.researchTopic.id
A4
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tuw.researchTopic.id
C6
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tuw.researchTopic.name
Mathematical Methods in Economics
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tuw.researchTopic.name
Modeling and Simulation
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tuw.researchTopic.value
70
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tuw.researchTopic.value
30
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tuw.publication.orgunit
E105-03 - Forschungsbereich Ökonomie
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tuw.author.orcid
0000-0001-5986-6667
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tuw.author.orcid
0000-0001-6043-7181
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tuw.author.orcid
0000-0002-3103-3345
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tuw.event.name
Workshop on Heterogeneous Macro Expectations – New Evidence and Theory 2025
en
tuw.event.startdate
11-09-2025
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tuw.event.enddate
12-09-2025
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tuw.event.online
On Site
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tuw.event.type
Event for scientific audience
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tuw.event.place
Erlangen
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tuw.event.country
DE
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tuw.event.institution
Friedrich-Alexander-Universität
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tuw.event.presenter
Gasteiger, Emanuel
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wb.sciencebranch
Wirtschaftswissenschaften
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wb.sciencebranch.oefos
5020
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wb.sciencebranch.value
100
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item.openairetype
conference paper not in proceedings
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item.openairecristype
http://purl.org/coar/resource_type/c_18cp
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item.cerifentitytype
Publications
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item.languageiso639-1
en
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item.grantfulltext
none
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item.fulltext
no Fulltext
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crisitem.author.dept
University of California, Irvine, United States of America (the)
-
crisitem.author.dept
E105-03 - Forschungsbereich Ökonomie
-
crisitem.author.dept
E105-03 - Forschungsbereich Ökonomie
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crisitem.author.orcid
0000-0001-5986-6667
-
crisitem.author.orcid
0000-0001-6043-7181
-
crisitem.author.orcid
0000-0002-3103-3345
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crisitem.author.parentorg
E105 - Institut für Stochastik und Wirtschaftsmathematik
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crisitem.author.parentorg
E105 - Institut für Stochastik und Wirtschaftsmathematik
