Olivier Coibion, Yuriy Gorodnichenko, Michael Weber, 19 June 2020

The COVID-19 pandemic has resulted in some of the largest monetary and fiscal policy responses around the world. This column uses a large-scale survey of US households during the pandemic to study how new information about the coronavirus and associated policy responses affect households’ expectations. It finds that such information treatments have little effect on both households’ economic beliefs and future spending plans. This result is a fundamental challenge to workhorse models used by macroeconomists in which the rapid and endogenous adjustment of household expectations is a key driver of macroeconomic outcomes.

Kevin Bryan, 29 October 2019

The 2019 Nobel Prize in Economic Sciences has been awarded jointly to Abhijit Banerjee, Esther Duflo, and Michael Kremer “for their experimental approach to alleviating global poverty”. This column outlines their impact on development economics research and practical action to reduce poverty. It also considers some of the critiques of randomised controlled trials as an approach to development.

Arnaldo Camuffo, Alessandro Cordova, Alfonso Gambardella, 06 January 2018

Entrepreneurs often predict future revenues using rules of thumb. The column argues that by testing precise hypotheses, 'scientist-entrepreneurs' would be less likely to invest in failures. A randomised controlled trial among Italian start-ups showed that this technique increased average returns for entrepreneurs. Used more generally, the precision effect may help screen out bad business ideas at an early stage.

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