Subjective Models of Workers and Managers for Macroeconomic Expectations

We propose a measure of subjective models of the macroeconomy for firms and workers. Subjective models are highly heterogeneous across agents, and their distribution is similar within the groups of firm managers and workers. At the same time, the beliefs of managers and workers who hold the same subjective models are different in reaction to monetary shocks. The expected persistence of monetary policy tightening differs across managers based on their subjective models but not across workers. And the expected effect of monetary tightening on short-term inflation differs across workers based on their subjective models but not across managers.