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Attention-Dependent Monetary Transmission to Household Beliefs

Author

Listed:
  • Jaemin Jeong

    (Duke University)

  • Eunseong Ma

    (Yonsei University)

  • Choongryul Yang

    (Federal Reserve Board)

Abstract

When do households listen to the Fed? We show the answer lies in a simple but powerful force: household attention to macroeconomic conditions. We develop a model where attention acts as a crucial gatekeeper for the pass-through of policy news to beliefs, and confirm its predictions using household survey data. We find that belief revisions to monetary policy surprises are concentrated among attentive individuals—particularly those with high financial stakes—and this effect strengthens dramatically during uncertain times. This implies the expectations channel is most potent when it matters most, suggesting policymakers should account for the time-varying and heterogeneous nature of public attention.

Suggested Citation

  • Jaemin Jeong & Eunseong Ma & Choongryul Yang, 2025. "Attention-Dependent Monetary Transmission to Household Beliefs," Working papers 2025rwp-261, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2025rwp-261
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    References listed on IDEAS

    as
    1. Ahn, Hie Joo & Xie, Shihan & Yang, Choongryul, 2024. "Effects of monetary policy on household expectations: The role of homeownership," Journal of Monetary Economics, Elsevier, vol. 147(C).
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    More about this item

    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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