Inflation Expectations and Consumer Spending at the Zero Bound: Micro Evidence

Hibiki Ichiue () and Shusaku Nishiguchi
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Shusaku Nishiguchi: Bank of Japan

No 13-E-11, Bank of Japan Working Paper Series from Bank of Japan

Abstract: Standard theoretical models predict that higher inflation expectations generate greater current consumer spending at the zero lower bound of interest rates. However, a recent empirical study using US micro data finds negative results for this relationship. We use micro data for Japan, which has experienced low interest rates for a prolonged period, to estimate ordered probit models with a variety of controls. We find evidence supporting the prediction of standard models: survey respondents with higher expected inflation tend to indicate that their household has increased real spending compared with one year ago but will decrease it in the future. This relationship appears to be stronger for asset holders and older people.

Keywords: Inflation expectations; Survey data; Monetary policy; Zero lower bound; Japan (search for similar items in EconPapers)
JEL-codes: E20 E21 E30 E31 E50 E52 (search for similar items in EconPapers)
Date: 2013-07-12
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (13)

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Related works:
Journal Article: INFLATION EXPECTATIONS AND CONSUMER SPENDING AT THE ZERO BOUND: MICRO EVIDENCE (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:boj:bojwps:13-e-11

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