How does household expenditure respond to inflation expectations? Evidence from randomized information treatments in Japan

Takeshi Niizeki

Applied Economics Letters, 2023, vol. 30, issue 15, 2035-2039

Abstract: Exploiting an exogenous variation in inflation expectations driven by randomized information treatments, I examined the extent to which the inflation expectations influence the current household expenditure in Japan. The findings are as follows. First, those who received the information on the latest inflation rate (‒0.6%) revised their inflation expectations downward. Second, a rise in inflation expectations has a positive impact on the current household expenditure. Third, the estimated intertemporal elasticity of substitution is large (about unity), suggesting that the intertemporal substitution played an important role in the current analysis.

Date: 2023
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DOI: 10.1080/13504851.2022.2089618

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