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Comment on “No firm is an island? How industry conditions shape firms’ expectations” by Philippe Andrade, Olivier Coibion, Erwan Gautier and Yuriy Gorodnichenko

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  • Salle, Isabelle

Abstract

Andrade et al. analyze the data from a large panel of firms and show how sector-specific shocks erroneously influence firms’ outlooks about the aggregate economy. This paper is part of a broader research agenda that has extensively documented the existence of information rigidities using data from large-scale surveys of households and firms. This comment discusses the implications of this research agenda for central banking in light of a complementary empirical method, namely laboratory experiments, and their use in informing macroeconomic policies.

Suggested Citation

  • Salle, Isabelle, 2022. "Comment on “No firm is an island? How industry conditions shape firms’ expectations” by Philippe Andrade, Olivier Coibion, Erwan Gautier and Yuriy Gorodnichenko," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 57-61.
    • Handle: RePEc:eee:moneco:v:125:y:2022:i:c:p:57-61
    DOI: 10.1016/j.jmoneco.2021.06.003
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    References listed on IDEAS

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    1. John H. Kagel & Alvin E. Roth, 2016. "The Handbook of Experimental Economics, Volume 2," Economics Books, Princeton University Press, edition 1, volume 2, number 10874.
    2. Camille Cornand & Paul Hubert, 2020. "On the external validity of experimental inflation forecasts," Post-Print hal-02894262, HAL.
    3. Baeriswyl, Romain & Boun My, Kene & Cornand, Camille, 2021. "Double overreaction in beauty contests with information acquisition: Theory and experiment," Journal of Monetary Economics, Elsevier, vol. 118(C), pages 432-445.
    4. Arifovic, Jasmina & Petersen, Luba, 2017. "Stabilizing expectations at the zero lower bound: Experimental evidence," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 21-43.
    5. Olivier Coibion & Yuriy Gorodnichenko, 2012. "What Can Survey Forecasts Tell Us about Information Rigidities?," Journal of Political Economy, University of Chicago Press, vol. 120(1), pages 116-159.
    6. Cornand, Camille & Hubert, Paul, 2020. "On the external validity of experimental inflation forecasts: A comparison with five categories of field expectations," Journal of Economic Dynamics and Control, Elsevier, vol. 110(C).
    7. Olivier Coibion & Yuriy Gorodnichenko & Edward S. Knotek & Raphael Schoenle, 2023. "Average Inflation Targeting and Household Expectations," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 1(2), pages 403-446.
    8. Baeriswyl, Romain & Boun My, Kene & Cornand, Camille, 2021. "Double overreaction in beauty contests with information acquisition: Theory and experiment," Journal of Monetary Economics, Elsevier, vol. 118(C), pages 432-445.
    9. Cars Hommes & Domenico Massaro & Isabelle Salle, 2019. "Monetary And Fiscal Policy Design At The Zero Lower Bound: Evidence From The Lab," Economic Inquiry, Western Economic Association International, vol. 57(2), pages 1120-1140, April.
    10. John H. Kagel & Alvin E. Roth, 2016. "Macroeconomics: A Survey of Laboratory Research," Introductory Chapters, in: The Handbook of Experimental Economics, Volume 2, Princeton University Press.
    11. Camille Cornand & Paul Hubert, 2020. "On the external validity of experimental inflation forecasts: A comparison with five categories of field expectations," Post-Print halshs-02285233, HAL.
    12. repec:hal:spmain:info:hdl:2441/7t8isspkbs8hk8kol9kk9sjdl6 is not listed on IDEAS
    13. Isabelle Salle, 2021. "What to Target? Insights from a Lab Experiment," Staff Working Papers 21-53, Bank of Canada.
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    Cited by:

    1. Lustenhouwer, Joep & Salle, Isabelle, 2022. "Forecast revisions in the presence of news: a lab investigation," Working Papers 0714, University of Heidelberg, Department of Economics.

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    More about this item

    Keywords

    Information rigidities; Expectations; Survey data; Experimental macroeconomics;
    All these keywords.

    JEL classification:

    • E7 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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