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

Myungkyu Shim, Kwang Hwan Kim, Myunghwan Andrew Lee, Sangyup Choi, Siye Bae, Olivier Coibion and Yuriy Gorodnichenko

No 21315, CEPR Discussion Papers from Centre for Economic Policy Research

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: Randomized controlled trial (rct); Government debt; Expectations; Transaction-level data (search for similar items in EconPapers)
JEL-codes: E21 E3 E62 (search for similar items in EconPapers)
Date: 2026-03
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Related works:
Working Paper: The Effects of Fiscal News on Household Expectations and Spending: New Causal Evidence (2026)
Working Paper: The Effects of Fiscal News on Household Expectations and Spending: New Causal Evidence (2026)
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