HOW DOES CONSUMPTION RESPOND TO NEWS ABOUT INFLATION? FIELD EVIDENCE FROM A RANDOMIZED CONTROL TRIAL
By Olivier Coibion, Dimitris Georgarakos, Y. Gorodnichenko, M.C.J. van Rooij. AEA Randomized Controlled Trials, 2019
158 citations recorded by the source corpus.
We implement a survey of Dutch households in which random subsets of respondents receive information about inflation. The resulting exogenously generated variation in inflation expectations is used to assess how expectations affect consumption decisions. The causal effects of reduced inflation expectations on nondurable spending are imprecisely estimated, but there is a sharp positive effect on durable spending. This is likely driven by the fact that Dutch households seem to become more optimistic about their real income and aggregate spending when they decrease their inflation expectations. We find little role for cognitive or financial constraints in explaining spending responses. (JEL C83, D12, D83, D84, E21, E31)
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/669a30dd9fb0da87df4149db012e4c2ac8752ab2
How researchers see this paper
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In Economics and Econometrics
- Michael Weber
- Olivier Coibion
- Y. Gorodnichenko
- Dimitris Georgarakos
- G. Kenny
- Raphael S. Schoenle
- V. Ramey
- Nicholas Barberis
Citations in the corpus
- The Effect of Macroeconomic Uncertainty on Household Spending (2021, methodology): “Coibion, Gorodnichenko and Weber (2019) and Coibion et al. (2019) follow a similar strategy to show that exogenous variation in households’ inflation expectations affect their subsequent spending decisions.”
- The Cost of the Covid-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending (2020, unknown): “During the binding lower bound on nominal interest rates, inflation expectations translate oneto-one into changes in real interest rates (Euler equation) which can directly impact current and future consumption choices (Coibion et al. 2019, D’Acunto et al. 2016).”