Consumption response to temporary price shock: Evidence from Singapore's annual sale event

Sumit Agarwal, Kang Mo Koo and Wenlan Qian

Journal of Financial Intermediation, 2022, vol. 51, issue C

Abstract: Exploiting debit card and credit card transactions of a large, representative sample of consumers from a leading bank in Singapore, we examine the consumption response to an anticipated, transitory price shock generated by the nation-wide annual sale event. Consumers significantly increase their spending during the sale event. More importantly, we find inter-temporal substitution where consumers spend less immediately before the event, and cross-categorical substitution behavior where consumers decrease spending in items unaffected by the sale event. However, consumers exhibit little substitution behavior when they use credit cards or when they are liquidity constrained, highlighting the importance of heterogeneity in assessing the aggregate impact of such stimulus programs.

Keywords: Consumption; Great singapore sale; Credit card; Debit card; Household finance; Spending; Transitory shocks; Fiscal stimulus program (search for similar items in EconPapers)
JEL-codes: D12 D14 D21 H3 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:51:y:2022:i:c:s1042957322000195

DOI: 10.1016/j.jfi.2022.100966

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