Macroeconomic Expectations and Credit Card Spending

Misha Galashin, Martin Kanz () and Ricardo Perez-Truglia

No 28281, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: How do macroeconomic expectations affect consumer decisions? We examine this question using an experiment with 2,872 credit card customers at a large commercial bank. We provide participants with expert forecasts of inflation and the nominal exchange rate and measure the consumption response to this information using detailed administrative data on individual credit card transactions. We find that forecasts strongly affect inflation and exchange rate expectations, but do not change spending or self-reported consumption plans as predicted by standard models of intertemporal choice. Results from a supplementary survey experiment suggest that consumers are sophisticated enough to anticipate nominal rigidities that lower their real income and reduce spending on durables for precautionary reasons, counteracting the effects predicted by standard models of intertemporal optimization. The absence of a link between consumer expectations and behavior has potentially important implications for macroeconomic policies such as forward guidance.

JEL-codes: C81 C93 D83 D84 E03 E31 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-exp, nep-mac and nep-mon
Note: IFM
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Citations: View citations in EconPapers (6)

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Working Paper: Macroeconomic Expectations and Credit Card Spending (2021)
Working Paper: Macroeconomic Expectations and Credit Card Spending (2021)
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