EconPapers    
Economics at your fingertips  
 

How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial

Olivier Coibion, Dimitris Georgarakos, Yuriy Gorodnichenko and Maarten van Rooij

No 12498, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We implement a survey of Dutch households in which random subsets of respondents receive information about inflation. The resulting exogenously generated variation in inflation expectations is used to assess how expectations affect subsequent monthly consumption decisions relative to those in a control group. The causal effects of elevated inflation expectations on non-durable spending are imprecisely estimated but there is a sharp negative effect on durable spending. We provide evidence that this is likely driven by the fact that Dutch households seem to become more pessimistic about their real income as well as aggregate spending when they increase their inflation expectations. There is little evidence to support the idea that the degree to which respondents change their beliefs or their spending in response to information treatments depends on their level of cognitive or financial constraints.

Keywords: survey data; inflation expectations; households; durable and non-durable consumption; randomized control trial (search for similar items in EconPapers)
JEL-codes: C83 D84 E31 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2019-07
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (84)

Downloads: (external link)
https://docs.iza.org/dp12498.pdf (application/pdf)

Related works:
Journal Article: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2023) Downloads
Working Paper: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2023) Downloads
Working Paper: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2019) Downloads
Working Paper: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2019) Downloads
Working Paper: How Does Consumption Respond to News About Inflation? Field Evidence from a Randomized Control Trial (2019) Downloads
Working Paper: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2019) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp12498

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().

 
Page updated 2025-03-30
Handle: RePEc:iza:izadps:dp12498