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The attention of the Fed

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  • Goldstein, Nathan

Abstract

This paper proposes a simple measure of the Fed's inattention to incoming information, based on the persistence of disagreement between the Fed and professional forecasters. I document a substantial degree of persistent disagreement over time and across variables, typically exceeding half. At a short horizon, there is also evidence of a significant attention advantage of the Fed over professional forecasters. Both the level of attention and the attention advantage are cyclical and tend to increase during periods of monetary easing, thus highlighting the state dependency of the information channel in monetary policy.

Suggested Citation

  • Goldstein, Nathan, 2025. "The attention of the Fed," Finance Research Letters, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:finlet:v:82:y:2025:i:c:s1544612325008207
    DOI: 10.1016/j.frl.2025.107561
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    References listed on IDEAS

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    1. George-Marios Angeletos & Zhen Huo & Karthik A. Sastry, 2021. "Imperfect Macroeconomic Expectations: Evidence and Theory," NBER Macroeconomics Annual, University of Chicago Press, vol. 35(1), pages 1-86.
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    More about this item

    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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