News and Uncertainty About COVID-19: Survey Evidence and Short-Run Economic Impact

51 Pages Posted: 11 Feb 2022

See all articles by Alexander Dietrich

Alexander Dietrich

University of Tübingen

Keith Keuster

University of Bonn

Gernot J. Müller

University of Tuebingen - Department of Economics

Raphael Schoenle

Brandeis University

Multiple version iconThere are 2 versions of this paper

Date Written: December 2021

Abstract

A tailor-made survey documents consumer perceptions of the U.S.~economy's response to a large shock: the advent of the COVID-19 pandemic. The survey ran at a daily frequency between March 2020 and July 2021. Consumer perceptions regarding output and inflation react rapidly. Uncertainty is pervasive. A business-cycle model calibrated to the consumer views provides an interpretation. The rise in household uncertainty amplifies the pandemic recession by a factor of three. Different perceptions about monetary policy can explain why consumers and professional forecasters agree on the recessionary impact, but have sharply divergent views about inflation.

Keywords: Consumer expectations, Large shock, monetary policy, survey, uncertainty

JEL Classification: C83, E32, E52

Suggested Citation

Dietrich, Alexander and Kuester, Keith and Müller, Gernot J. and Schoenle, Raphael, News and Uncertainty About COVID-19: Survey Evidence and Short-Run Economic Impact (December 2021). CEPR Discussion Paper No. DP16766, Available at SSRN: https://ssrn.com/abstract=4026630

Alexander Dietrich (Contact Author)

University of Tübingen ( email )

Germany

Keith Kuester

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Gernot J. Müller

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

Raphael Schoenle

Brandeis University ( email )

Waltham, MA 02454
United States

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