The Relationship between Inflation Expectations and Consumption in Exceptional Times: Evidence from Thailand and Vietnam during the COVID-19 Pandemic

Dzung Bui () and Bernd Hayo
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Dzung Bui: Philipps-Universität Marburg, School of Business and Economics

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Using representative household surveys conducted during the COVID-19 pandemic in two emerging economies, Thailand and Vietnam, we examine the relationship between inflation expectations and consumption. In both countries, our results show an insignificant relationship between expected inflation and durable consumption intentions. In addition, we rigorously test whether the null overall effect of inflation expectations on consumption is due to heterogeneity across different groups of households. However, we cannot reject the homogeneity restriction and conclude that we find no evidence to support either the widely accepted intertemporal optimisation theory or the competing 'stagflationary' view of consumption.

Keywords: Inflation expectations; consumption; COVID-19; Thailand; Vietnam (search for similar items in EconPapers)
JEL-codes: D12 D83 E62 E71 H31 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:202408

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