Monetary Policy Communication and Social Identity: Evidence from a Randomized Control Trial

This paper investigates how social identity influences the assimilation of monetary policy information. We conduct a randomized control trial in Japan to test whether consumers respond more strongly to inflation forecasts from the Bank of Japan (BOJ) when the message is delivered by a narrator who shares their social identity. Respondents are randomly assigned to hear the BOJ’s forecast in either standard Japanese or the Osaka dialect, both narrated by a female speaker. We find that individuals are significantly more likely to revise their inflation expectations toward the BOJ’s forecast when the narrator shares the respondent’s gender, dialect, or political alignment. Women are more responsive to forecasts delivered by a female narrator; Osaka residents react more strongly to messages in the Osaka dialect; and government supporters exhibit greater belief updating in response to BOJ forecasts. These findings suggest that central banks can enhance the effectiveness of their communication by tailoring messages to align with the social identities of target audiences, although it is essential to recognize potential risks.