Abstract This paper shows how policy announcements can be used to manage expectations. Using regional variation in radio exposure, I evaluate the impact of FDR’s 1935 Fireside Chat, in which he showcased the introduction of important social policies, establishing a new expansionary cycle of the New Deal. I document that cities with higher exposure to the announcement exhibited a significant increase in spending on durable goods. The estimated effect is consistent with changes in expectations in line with the policies announced. This paper shows the power of communication as a policy tool.

Abstract We estimate the effects of monetary policy shocks across local areas in the US and find substantial variation in their responses. There is a positive covariance of the price and employment effects of monetary policy across regions, and more sensitive regions are those with low per capita income. These patterns are consistent with New Keynesian models of a monetary union where regions have different shares of handto- mouth consumers. The model predicts that monetary policy shocks create large differences in consumption and real wages across space, and that heterogeneity across local areas amplifies the aggregate responses to shifts in monetary policy rates.