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Households' Response to the Wealth Effects of Inflation

Philip Schnorpfeil, Michael Weber and Andreas Hackethal

No 31672, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the redistributive effects of inflation combining administrative bank data with an information provision experiment during an episode of historic inflation. On average, households are well-informed about prevailing inflation and are concerned about its impact on their wealth; yet, while many households know about inflation eroding nominal assets, most are unaware of nominal-debt erosion. Once they receive information on the debt-erosion channel, households update upwards their beliefs about nominal debt and their own real net wealth. These changes in beliefs causally affect actual consumption and hypothetical debt decisions. Our findings suggest that real wealth mediates the sensitivity of consumption to inflation once households are aware of the wealth effects of inflation.

JEL-codes: D12 D14 D83 D84 E21 E31 E52 (search for similar items in EconPapers)
Date: 2023-09
New Economics Papers: this item is included in nep-ban, nep-mac and nep-mon
Note: AP EFG ME
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Households' response to the wealth effects of inflation (2024) Downloads
Working Paper: Households' Response to the Wealth Effects of Inflation (2024) Downloads
Working Paper: Households’ Response to the Wealth Effects of Inflation (2023) Downloads
Working Paper: Households' response to the wealth effects of inflation (2023) Downloads
Working Paper: Households' response to the wealth effects of inflation (2023) Downloads
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