Monetary Policy Preferences

This paper enters the international/comparative political-economy debate about whether individual-level macroeconomic policy preferences are egocentric and, if so, on what basis (factors, sectors or firms). It argues that contextual information may function as a pre-condition for the emergence of egocentric preferences. With a focus on the tradeoff between using monetary policy for a domestic or an international goal, it presents evidence from three original American surveys using informative vignettes to show how monetary policy preferences exhibit firm-based egocentric variation: individuals whose employer does most of its business in overseas markets have a lesser preference for domestic monetary autonomy. It also presents evidence from a survey experiment to show how the strength of this egocentric relationship depends on the informative power of the vignette: a more contextually informative vignette produces a stronger relationship between overseas business activity and a preference against domestic monetary autonomy.