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Fireside Chats: Communication and Consumers’ Expectations in the Great Depression

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  • Mathieu Pedemonte

Abstract

This paper shows how policy announcements can be used to manage expectations and have a role as a policy tool. Using regional variation in radio exposure, I evaluate the impact of President Franklin D. Roosevelt’s 1935 Fireside Chat, in which he showcased the introduction of important social policies, establishing a new cycle of the New Deal. I document that cities with higher exposure to the announcement exhibited a significant increase in spending on durable goods. I provide evidence that this result is not driven by wealth or other potentially confounding variables. The estimated effect is consistent with changes in expectations toward the policies announced. This paper shows the power of communication as a policy tool in affecting economic activity.

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  • Mathieu Pedemonte, 2020. "Fireside Chats: Communication and Consumers’ Expectations in the Great Depression," Working Papers 20-30, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwq:88844
    DOI: 10.26509/frbc-wp-202030
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    References listed on IDEAS

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    14. repec:pri:cepsud:161blinder is not listed on IDEAS
    15. Fishback, Price V. & Horrace, William C. & Kantor, Shawn, 2005. "Did New Deal Grant Programs Stimulate Local Economies? A Study of Federal Grants and Retail Sales During the Great Depression," The Journal of Economic History, Cambridge University Press, vol. 65(1), pages 36-71, March.
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    Cited by:

    1. Olivier Coibion & Dimitris Georgarakos & Yuriy Gorodnichenko & Geoff Kenny & Michael Weber, 2024. "The Effect of Macroeconomic Uncertainty on Household Spending," American Economic Review, American Economic Association, vol. 114(3), pages 645-677, March.
    2. Bernardo Candia & Mathieu Pedemonte, 2021. "Export-Led Decay: The Trade Channel in the Gold Standard Era," Working Papers 21-11r, Federal Reserve Bank of Cleveland, revised 08 Nov 2021.
    3. Candia, Bernardo & Coibion, Olivier & Gorodnichenko, Yuriy, 2024. "The inflation expectations of U.S. firms: Evidence from a new survey," Journal of Monetary Economics, Elsevier, vol. 145(S).
    4. Bernardo Candia & Olivier Coibion & Yuriy Gorodnichenko, 2020. "Communication and the Beliefs of Economic Agents," NBER Working Papers 27800, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-

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