Macroeconomic expectations and consumer sentiment during the COVID-19 pandemic

The role of others’ beliefs

authored by: Dzung Bui, Lena Dräger, Bernd Hayo, Giang Nghiem
Abstract: This paper investigates the effect of information about cross-country ratings of the government's and the public's reaction to the COVID-19 pandemic on consumers’ macroeconomic expectations and sentiment. We conduct consumer surveys with randomized control trials (RCTs) in two waves in Thailand and Vietnam. The information treatments have the strongest effect when the information shown contradicts consumers’ prior beliefs. In the first survey, conducted when the first lockdown was eased, treatment effects are stronger in Vietnam, causing more optimistic expectations and sentiment. In the second survey, conducted at the start of the second wave of infections, treatment effects are stronger in Thailand, causing a more pessimistic outlook.
Organisation(s): Institute of Monetary Economics
External Organisation(s): Philipps-Universität Marburg
Munich Society for the Promotion of Economic Research - CESifo GmbH
Type: Article
Journal: European Journal of Political Economy
Volume: 77
No. of pages: 23
ISSN: 0176-2680
Publication date: 03.2023
Publication status: Published
Peer reviewed: Yes
ASJC Scopus subject areas: Economics and Econometrics, Political Science and International Relations
Electronic version(s): https://doi.org/10.1016/j.ejpoleco.2022.102295 (Access: Closed)
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9463073 (Access: Open)

BibTeX

@article{d7221ba9dd4d43caa6f86c010c3884f0,
title = "Macroeconomic expectations and consumer sentiment during the COVID-19 pandemic: The role of others{\textquoteright} beliefs",
abstract = "This paper investigates the effect of information about cross-country ratings of the government's and the public's reaction to the COVID-19 pandemic on consumers{\textquoteright} macroeconomic expectations and sentiment. We conduct consumer surveys with randomized control trials (RCTs) in two waves in Thailand and Vietnam. The information treatments have the strongest effect when the information shown contradicts consumers{\textquoteright} prior beliefs. In the first survey, conducted when the first lockdown was eased, treatment effects are stronger in Vietnam, causing more optimistic expectations and sentiment. In the second survey, conducted at the start of the second wave of infections, treatment effects are stronger in Thailand, causing a more pessimistic outlook.",
keywords = "Belief updating, Consumer sentiment, COVID-19, Macroeconomic expectations, Randomized control trial (RCT), Survey experiment, Thailand, Vietnam",
author = "Dzung Bui and Lena Dr{\"a}ger and Bernd Hayo and Giang Nghiem",
note = "Funding Information: We thank the editor as well as three anonymous referees for valuable comments that helped improve the paper. We also thank Carola Binder, Michael Ehrmann, Tobin Hanspal, Baptiste Massenot, Michael Weber, Stephan Thomsen and Lisa Spantig for helpful comments. We thank Long Giang for providing Vietnamese data used to calculate demographic statistics as benchmarks for the population weights. In addition, we thank seminar participants at the Macroeconomic Policy Institute (IMK) and the Leibniz University Hannover, as well as participants of the 26th IIF Workshop: Economic Forecasting in Times of Covid-19, the 8th International Conference on Applied Research in Economics, the 11th ifo Conference on Macroeconomics and Survey Data, German Economic Association Annual Congress 2021, European Economic Association Annual Congress 2021, and the International TVSEP Conference on “Shocks and Resilience in Rural Southeast Asia” 2022 for comments and suggestions.",
year = "2023",
month = mar,
doi = "10.1016/j.ejpoleco.2022.102295",
language = "English",
volume = "77",
journal = "European Journal of Political Economy",
issn = "0176-2680",
publisher = "Elsevier",
}