The Effects of Fiscal News on Household Expectations and Spending: New Causal Evidence

Myungkyu Shim (), Kwang Hwan Kim (), Myunghwan Lee (), Sangyup Choi (), Siye Bae (), Olivier Coibion () and Yuriy Gorodnichenko
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Myungkyu Shim: Yonsei University
Kwang Hwan Kim: Yonsei University
Myunghwan Lee: New York University
Sangyup Choi: Yonsei University
Siye Bae: Northwestern University
Olivier Coibion: University of Texas, Austin

No 18486, IZA Discussion Papers from IZA Network @ LISER

Abstract: We provide experimental evidence on how fiscal news shapes households’ expectations and spending behavior. Using a new survey of ~11,000 Korean individuals linked to automatically collected high-frequency spending data, we elicit respondents’ fiscal and macroeconomic beliefs and randomly provide them with one of five pieces of information about current public debt levels, fiscal deficits, and the government’s plans for deficit reduction. Exogenous increases in expected future public debt raise expected inflation and increase consumer spending. On the other hand, exogenous increases in expected fiscal balance raise expected output growth and have no significant effect on consumer spending.

Keywords: RCT; government debt; fiscal policy; expectations; transaction-level data; consumption (search for similar items in EconPapers)
JEL-codes: E21 E3 E62 (search for similar items in EconPapers)
Date: 2026-03
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Working Paper: The Effects of Fiscal News on Household Expectations and Spending: New Causal Evidence (2026)
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