Understanding the impact of severe hyperinflation experience on current household investment behavior

José Fajardo and Manuela Dantas

Journal of Behavioral and Experimental Finance, 2018, vol. 17, issue C, 60-67

Abstract: We propose that a hyperinflation event has a long-lasting effect on household investment behavior. We want to investigate whether future stock market participation can be influenced by a single extreme macroeconomic instability episode. We use data from the Brazilian Institute of Geography and Statistics and find that households who experienced hyperinflation as young adults (i) show lower willingness to invest in stocks than others, and (ii) are less likely to save for the future. Results hold after controlling for various household characteristics and other macroeconomic events.

Keywords: Hyperinflation; Investments; Household behavior (search for similar items in EconPapers)
JEL-codes: D03 D14 D83 D84 E21 G11 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:17:y:2018:i:c:p:60-67

DOI: 10.1016/j.jbef.2017.12.008

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