This paper analyzes the time-varying credibility of the Fed’s inflation target in an empirical macro model with asymmetric information, where the public has to learn about the actual inflation target from the Fed’s interest rate policy. To capture the evolving communication strategy of the Fed, I allow the learning rule and the structural shock variances to change across monetary policy regimes. I find that imperfect credibility is pronounced during the Volcker Disinflation and to a lesser extend in the aftermath of the 2008 Financial Crisis. The announcement of the 2% target in 2012 did not affect the learning rule strongly but reduced the variance of transitory monetary policy shocks. The results caution against equating long-term inflation expectations of professionals with the perceived inflation target.

Using a new experimental design, we compare how subjects form beliefs in an investorclient setup under varying degrees of liability. Our results re ect the importance of social preferences when making investment decisions for others. We show that when investors have no liability, those with stronger social preferences are more optimistic about the probability that their investment results in a gain. In other words, we nd that social preferences appear to be correlated with motivated beliefs. This nding suggests the existence of cognitive biases in nancial decision-making and supports the recent literature on the formation of motivated beliefs under limited liability (Barberis, 2015; B enabou and Tirole, 2016).

The COVID-19 pandemic has led to lifestyle changes across Europe with a likely impact on sleep quality. This investigation considers sleep quality in relation to the evolution of the COVID-19 pandemic in five European countries. Using panel regressions and keeping policy responses to COVID-19 constant, we show that an increase in the four-week average daily COVID-19 deaths/100,000 inhabitants (our proxy for the evolution of the pandemic) significantly reduced sleep quality in France, Germany, Italy, Spain, and Sweden between April 2020 and June 2021. Our results are robust to a battery of sensitivity tests and are larger for women, parents and young adults. Additionally, we show that about half of the reduction in sleep quality caused by the evolution of the pandemic can be attributed to changes in lifestyles, worsened mental health and negative attitudes toward COVID-19 and its management (lower degree of confidence in government, greater fear of being infected). In contrast, changes in one’s own infection-status from the SARS-CoV-2 virus or sleep duration are not significant mediators of the relationship between COVID-19-related deaths and sleep quality.

We use a representative online survey to investigate the inflation expectations of German consumers and the credibility of the ECB’s inflation target during the recent high inflation period. We find that credibility has trended downwards since summer 2021, reaching an all-time low in April 2022. The high correlation between inflation expectations and the actual rate of inflation strongly indicate that inflation expectations have been de-anchored from the inflation target. With increasing inflation, German consumers are more convinced that - in contrast to the ECB’s inflation target - inflation will be well above 2% over the medium term.

We investigate the welfare effect of increasing competition in an anonymous two-sided matching market, where matched pairs play an infinitely repeated Prisoner’s Dilemma. Higher matching efficiency is usually considered detrimental as it creates stronger incentives for defection. We point out, however, that a reduction in matching frictions also increases welfare because more agents find themselves in a cooperative relationship. We characterize the conditions for which increasing competition increases overall welfare. In particular, this is always the case when the incentives for defection are high.

We propose a novel view of selection bias in longitudinal surveys. Such bias may arise from initial nonresponse in a probability sample, or it may be caused by self-selection in an internet survey. A contraction theorem from mathematical demography is used to show that an initial bias can "fade-away" in later panel waves, if the transition laws in the observed sample and the population are identical. Panel attrition is incorporated into the Markovian framework. Extensions to Markov chains of higher order are given, and the limitations of our approach under population heterogeneity are discussed. We use empirical data from a German Labour Market Panel to demonstrate the extend and speed of the fade-away effect. The implications of the new approach on the treatment of nonresponse, and attrition weighting, are discussed.

This paper proposes a Skewed Stochastic Volatility (SSV) model to model time varying, asymmetric forecast distributions to estimate Growth at Risk as introduced in Adrian, Boyarchenko, and Giannone’s (2019) seminal paper ”Vulnerable Growth”. In contrary to their semi-parametric approach, the SSV model enables researchers to capture the evolution of the densities parametrically to conduct statistical tests and compare different models. The SSV-model forms a non-linear, non-gaussian state space model that can be estimated using Particle Filtering and MCMC algorithms. To remedy drawbacks of standard Bootstrap Particle Filters, I modify the Tempered Particle Filter of Herbst and Schorfheide’s (2019) to account for stochastic volatility and asymmetric measurement densities. Estimating the model based on US data yields conditional forecast densities that closely resemble the findings by Adrian et al. (2019). Exploiting the advantages of the proposed model, I find that the estimated parameter values for the effect of financial conditions on the variance and skewness of the conditional distributions are statistically significant and in line with the intuition of the results found in the existing literature.

We replicate Meissner (2016) where debt aversion was reported for the first time in an intertemporal consumption and saving problem. While Meissner (2016) uses a German sample, our subjects are US undergraduate students. All of the main findings from the original study replicate, with similar effect sizes. Additionally, we extend the original analysis by correlating a new individual index of debt aversion on individual characteristics such as gender, cognitive ability, and risk aversion. The findings suggest that gender and risk aversion are not correlated with debt aversion. However, cognitive ability is positively correlated with debt aversion. Overall, this paper confirms the importance of debt aversion in intertemporal consumption problems and validates the approach of Meissner (2016).