I document that partisanship strongly affects self-declared politically Independent households' expectations and the type of macroeconomic information they choose to pay attention to. Republican leaners align more with strong Republicans, while Democrat leaners are similar to weak Democrats in their expectations formation and attention to macroeconomics news. This new insight has important implications when formulating surveys to assess the individual political party and how researchers should categorize them to avoid potential distortions in economic analyses. I show how classifying leaners as Independents can lead to bias in the estimation. 

We provide novel evidence that corporate debt maturity plays an important role in the transmission of U.S. monetary policy to foreign firms. Using an identification strategy that explores the ex-ante maturity structure of long-term debt to predict firms’ financial position in a given year, we show that the effect of U.S. monetary policy shocks on foreign firms is amplified by financing constraints. After a contractionary shock, financial conditions in foreign countries become tighter, and firms with a high proportion of long-term debt maturing right after the shock significantly decrease investment and sales. We find that firms in emerging economies are much more affected by these shocks compared to those in advanced economies, and the amplification effect of U.S. monetary policy shocks by financing constraints is present only in emerging economies.

Using a novel approach involving natural language processing (NLP) algorithms, we construct a new cross-country index of firms' inflation expectations from earnings call transcripts. Our index has a high correlation with existing survey-based measures of firms' inflation expectations, it is robust to external validation tests and is built using a new method that outperforms other NLP algorithms. In an application of our index to United States, we uncover some facts related to firm's inflation expectations. We show that higher expected inflation translates into future inflation. Going into the firms level dimension of our index, we show departures from a rational framework in firms' inflation expectations and that firms' attention to the central enhances monetary policy effectiveness. 

This paper uses the Brazilian central bank’s loss of credibility episode under President Dilma Rousseff’s administration (2011-2014) to provide novel evidence that professional forecasters interpret monetary policy surprises differently depending on the level of central bank’s credibility. With credibility, they understand a monetary policy surprise as a monetary policy shock and decrease their inflation expectations 12 months ahead by -0.25%. With no credibility, they interpret it as an information effect and increase their inflation expectations by 0.57%. We also document three stylized facts: noneffective inflation target tolerance intervals during periods of low credibility, a loss of credibility has a long-lasting impact on long-term inflation expectations, and significantly higher disagreement among inflation expectations during low credibility periods. 

Abstract: There is no consensus in the literature if variations in consumers’ expectations cause a change in consumption. This paper used households’ political preferences as an instrument for variations in consumer sentiments and found an asymmetric and significant shift in macroeconomic expectations around US Presidential election that did not translate into readiness to spend. This paper investigates if there are expected changes in their economic conditions after the presidential elections. Results show no change in assessments regarding own employment status, personal income growth expectations, and credit availability prospects. Therefore, it supports the view that variations in macroeconomic expectations influenced by partisans do not reflect a precise personal judgment of the future economy and, consequently, do not translate into consumer behavior.