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Fiscal stimulus plans and households' expectations

Author

Listed:
  • Fiorella De Fiore
  • Marco Jacopo Lombardi
  • Albert Pierres Tejada

Abstract

Fiscal decisions develop through multiple stages of political discussions and lengthy legislative processes. We propose a measure of public attention to fiscal policy news based on Google Trends and investigate the reaction of households' expectations when attention is highest. We focus on three large U.S. fiscal stimulus plans: the CARES Act, the American Rescue Plan, and the Tax Cuts and Jobs Act. We find that attention peaks when the plan is approved by Congress or signed by the President. On those dates, financially literate households significantly adjust their expectations: those of inflation and earnings increase, while those of unemployment decline.

Suggested Citation

  • Fiorella De Fiore & Marco Jacopo Lombardi & Albert Pierres Tejada, 2024. "Fiscal stimulus plans and households' expectations," BIS Working Papers 1238, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1238
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    inflation expectations; fiscal policy; stimulus plans; households;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E70 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - General

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