1 Introduction

Ladies and gentlemen,

It is a great pleasure and honour to be here today. 

The Alexander von Humboldt Professorship: what an extraordinary and well-deserved recognition of Michael’s academic achievements, and one which reinforces highly policy-relevant, top-notch research in the areas of monetary economics, finance, and macroeconomic expectations in Germany.

Mentioning Michael’s research work brings back vivid memories of his excellent presentation as part of the Bundesbank Invited Speakers Series last year. I partly remember it so vividly because some of the results made it to my dinner table at home. This only happens to selected research. In his speech, Michael highlighted that experiences in everyday life shape our inflation expectations. Household members may have different views on future inflation depending on whether, for example, they go grocery shopping or go to the petrol station. I still remember Michael jokingly asking whether it may be that men’s inflation expectations are more informed by changes in the price of beer than women’s.

This is where my husband’s and my conversation continued in the evening. I’ll spare you the outcome. Yet these findings capture something essential about Michael’s research: they show that our everyday life experiences matter for the economy.

I am particularly pleased to give this laudatory speech because Michael is a trusted colleague and a friend of the Bundesbank. 

Michael has contributed to our work in various ways: as a Research Professor, as an adviser in the design and development of the Bundesbank’s Online Panel of Households and as a highly valued co-author who has collaborated with a number of Bundesbank researchers. 

On top of all this, I would like to mention Michael’s dedication to teaching young economists as a regular lecturer at our Summer School. Thank you, Michael – your work there is much appreciated.

The feedback I hear from students says a lot. Beyond teaching methods, Michael encourages students to question even established, well-published research. For many PhD students, this is a new and an eye-opening experience.

With that, I would like to focus on three key aspects of his research:

1. The remarkable breadth and depth of his work.

2. His research contribution to our understanding of heterogeneity in the economy.

3. And I would like to look ahead at Michael’s plans to improve the ways in which we measure expectations in his role at the new European Expectations Center at ESMT.

2 Remarkable breadth and depth

Let me start with the first point: Michael’s research showcases the remarkable breadth and depth of his expertise and intuition, spanning macroeconomics, monetary economics, behavioural economics, and finance. 

Michael’s outstanding work was recognised early and repeatedly with various highly regarded awards and has been cited widely (over 13,000 citations to date), so that the Alexander von Humboldt Professorship marks a next and very special milestone in this remarkable trajectory.

Again and again, Michael takes insights from one field and applies them to questions in another. 

In addition to asking highly relevant and spot-on questions – questions that, by the way, often seem surprisingly obvious once Michael has answered them – he also has a remarkable ability to combine existing datasets in novel ways.

To illustrate the breadth and depth of his work, let’s have a look at concrete papers. He is probably best known for his findings on expectation formation.

In their aptly names 2025 Econometrica paper “Tell Me Something I Don’t Already Know: Learning in Low- and High-Inflation Settings”, Michael and his co-authors examine how households and firms learn about inflation. 

Using randomised experiments across countries and different inflation environments, the authors show that the attention of households and firms to inflation is state-dependent: when inflation is on the rise, people pay more attention and become better informed; when, in contrast, inflation is low and stable, they know surprisingly little about it. 

Takeaway for central bank communication: we need to tailor our communication to the predominant inflation environment.

To span the breadth of Michael’s work, I would like to highlight another paper in a different but related field: fiscal policy. In his 2026 paper published in the Review of Economic Studies, “A Temporary VAT Cut as Unconventional Fiscal Policy”, which he wrote together with my Bundesbank colleagues Olga Goldfayn-Frank and Georgi Kocharkov among others, the authors show that a temporary cut in the value added tax (VAT) can be a powerful tool to stimulate consumption. 

More precisely, households perceiving that prices have fallen due to a temporary VAT cut increased their spending, particularly on durable goods – items such as fridges, for example. Importantly, consumers do not necessarily need to be financially sophisticated or forward-looking to respond to the VAT cut.

So, as a central banker I have to admit without envy that, under certain circumstances, such fiscal policy measures can be very effective in stimulating consumption.

The final paper to illustrate the breadth of Michael’s research takes a core concept from macroeconomics and applies it to the world of finance. In his 2016 American Economic Review paper “Are Sticky Prices Costly? Evidence from the Stock Market” Michael and his co-author Yuriy Gorodnichenko examine the consequences of price stickiness in the stock market.

They show that stock market returns of companies with stickier prices – for example due to longer term contracts or more costly, more nicely printed menus in the case of a restaurant – react more strongly to monetary policy surprises. This is intuitive because these firms take more time to react to relevant changes in their environment. So, with this paper Michael shows that nominal rigidities matter for monetary transmission to asset prices – building a bridge from macroeconomics through monetary policy straight into finance. 

Michael – who is a professor of finance – continues fruitful work in this area, most recently – this year – with a Review of Financial Studies paper, together with Ali Ozdagli,[1] where they show that monetary policy shocks affect firms not only directly, but also through networks of suppliers and customers, who react to the policy impulse. Strikingly, these network effects account for between 55 and 85 percent of overall stock returns.

So, to sum up, Michael’s work is remarkable in both its breadth and depth, combining strong policy relevance with an exceptional ability to build bridges across different fields of economics and finance.

This brings me to the second point that I would like to share:

3 Michael’s research contribution to our understanding of heterogeneity

It is a recurring theme across his work. He shows that heterogeneity does matter for policy transmission and explores in precisely which ways it matters. This is one of the key contributions of his research. 

Households and firms are exposed to different information sets and constraints. They are part of different networks of, for example, customers or suppliers. These differences matter because they shape the beliefs of households and firms, the actions they take and thereby the aggregate effects of policy.

A good example is Michael’s most recent (2026) Review of Financial Studies paper with another Bundesbank colleague of mine, Johannes Beutel: “Beliefs and Portfolios: Causal Evidence”. Using data from the Bundesbank Online Panel of Households, they study how households form expectations about stock market returns and how those expectations translate into portfolio choices. Using randomised information treatments about the German stock market in the Bundesbank Online Panel of Households, they find a striking contrast: households overreact for example to past returns when forming stock market return expectations, in ways models of expectation formation that are the standard today cannot explain. Yet, once these beliefs are formed, households’ portfolio choices are consistent with standard economic theory.

This distinction is relevant. What may appear to be puzzling heterogeneity in economic behaviour can originate in how people form their beliefs, rather than in how they act on them. For central banks, understanding how beliefs are formed and how people react to new information is highly relevant for our monetary policy transmission and hence policy formulation and communication.

4 Looking ahead 

This brings me to my third and final point: looking ahead at Michaels contribution to/at ESMT.

As head of the new European Expectations Center, Michael will now have the opportunity to push the measurement of economic expectations further and strengthen the evidence available for economic research and policymaking. 

There is a solid foundation to build upon: Germany and Europe have various surveys for measuring expectations, including, for example, the Bundesbank’s Online Panel of Households, the ECB’s Consumer Expectations Surveys and the European Commission’s consumer survey, as well as several conducted by research institutes. 

I am confident that Michael, being Michael, will push the boundaries further. 

One avenue Michael is taking is to broaden the perspective internationally, developing a comparable global set-up for measuring expectations across countries. This widens the set of data, allows for cross-country comparisons, and makes inference more robust. This work is already well underway, in co-operation with the BIS.

Another area is to bring expectations closer to actual economic behaviour by linking what people tell us in surveys to administrative and transaction data. This can show us whether – and where – people act on their beliefs. A gap between the two can reveal other forces driving their decisions, such as financial constraints and economic uncertainty.

And finally, it would be very helpful to make these surveys responsive to the questions policymakers face, using targeted surveys to evaluate policies and understand how households perceive and respond to a changing economic environment. This would fill the gap of an almost real-time survey tool for policy support.   

I know Michael has plenty of ideas – and I am sure we will hear more about his plans over the course of the evening. 

What is clear is that Michael’s ability to combine data in new ways and connect economic research with relevant policy questions gives the European Expectations Center a strong foundation for the future.

And in that sense, Michael is a perfect match for the Alexander von Humboldt Professorship: curiosity, intellectual breadth and a desire to explore new ideas are at the heart of Michael’s work, too.

I am sure that there will be research results coming out that make it to our dinner table for discussion with my husband, and I await the outcome with bated breath.

Dear Michael, congratulations on the Alexander von Humboldt Professorship.

Footnote:

1.  Ozdagli, Ali, and Michael Weber “Monetary policy through production networks: Evidence from the stock market.” The Review of Financial Studies, 2026.