The Effect of Macroeconomic Uncertainty on Household Spending

Yuriy Gorodnichenko, Dimitris Georgarakos, Geoff Kenny and Michael Weber
Authors registered in the RePEc Author Service: Olivier Coibion

No 15966, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using a new survey of European households, we study how exogenous variation in the macroeconomic uncertainty perceived by households affects their spending decisions. We use randomized information treatments that provide different types of information about the first and/or second moments of future economic growth to generate exogenous changes in the perceived macroeconomic uncertainty of some households. The effects on their spending decisions relative to an untreated control group are measured in follow-up surveys. Higher macroeconomic uncertainty induces households to reduce their spending on non-durable goods and services in subsequent months as well as to engage in fewer purchases of larger items such as package holidays or luxury goods. Moreover, uncertainty reduces household propensity to invest in mutual funds. These results support the notion that macroeconomic uncertainty can impact household decisions and have large negative effects on economic outcomes.

Keywords: Uncertainty; Household spending; Household finance; Surveys; Randomized control trial (search for similar items in EconPapers)
JEL-codes: E21 E3 E4 E5 (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-cwa and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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Related works:
Journal Article: The Effect of Macroeconomic Uncertainty on Household Spending (2024)
Working Paper: The effect of macroeconomic uncertainty on household spending (2021)
Working Paper: The Effect of Macroeconomic Uncertainty on Household Spending (2021)
Working Paper: The Effect of Macroeconomic Uncertainty on Household Spending (2021)
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