Household Inflation Expectations and Consumer Spending: Evidence from Panel Data

Mary Burke and Ali Ozdagli

No 2110, Working Papers from Federal Reserve Bank of Dallas

Abstract: Recent research offers mixed results concerning the relationship between inflation expectations and consumption, using qualitative measures of readiness to spend. We revisit this question using survey panel data of actual spending from the U.S. between 2009 and 2012 that also allows us to control for household heterogeneity. We find that durables spending increases with expected inflation only for selected types of households while nondurables spending does not respond to expected inflation. Moreover, spending decreases with expected unemployment. These results imply a limited stimulating effect of inflation expectations on aggregate consumption, which could be reversed if inflation and unemployment expectations move together.

Keywords: Inflation expectations; survey data; durable and nondurable goods consumption (search for similar items in EconPapers)
JEL-codes: D12 E52 E58 (search for similar items in EconPapers)
Pages: 108
Date: 2021-08-03
New Economics Papers: this item is included in nep-cwa, nep-isf, nep-mac and nep-mon
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Household Inflation Expectations and Consumer Spending: Evidence from Panel Data (2023)
Working Paper: Household Inflation Expectations and Consumer Spending: Evidence from Panel Data (2020)
Working Paper: Household inflation expectations and consumer spending: evidence from panel data (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:92968

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DOI: 10.24149/wp2110

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