The euro area Consumer Expectation Survey queries households about their expectations for a wide range of macroeconomic and individual-level variables, including economic growth, inflation, house prices, interest rates, and personal income growth. We find strong correlations between these expectations, which we use to identify two principal components that explain a significant portion of the total variance. These components represent households’ perceptions of the sources of macroeconomic dynamics, with the first reflecting supply-side shocks and the second reflecting demand-side shocks. Despite their stability over time, these components provide differential variation in household realized consumption in both durables and nondurables, and in precautionary savings. Overall, our results suggest that – at least since 2020 – households have been expecting supply-side shocks to be more important than demand-side shocks for the evolution of the business cycle.

Which words matter the most in central bank communication? Making use of a rather unique European monetary policy decision setting, we build the first monetary policy dictionary. We train the dictionary on high frequency movements of the stock market around press conferences of the European Central Bank. This allows us to precisely identify which phrases do the market mainly reacts to. We find that phrases such as “Improved economy”, “Market development”, and “Stability of the euro” are associated with positive returns. On the other hand, phrases such as “Heightened uncertainties” and “Growth of loans” are associated with negative returns.

Households’ income fluctuations in poor countries call for risk smoothing mechanisms, yet insurance is always found to be incomplete. We build a two-goods complete markets model, and confirm this result with the UNPS - a new representative Uganda household-level panel data. The empirical evidence suggests that the degree of consumption insurance differs across consumption goods: Households insure food better than other non-durables.

Teaching Assistant for the Ph.D. level Macroeconomics class. Fall 2019, Fall 2018, Fall 2017.