Homeownership and Attention to Inflation: Evidence from Information Treatments

Jessica Piccolo and Yuriy Gorodnichenko

No 33595, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Whose inflation expectations drive spending decisions? Using randomized information treatments on U.S. households, we show that the answer depends on homeownership status. Renters revise their inflation expectations strongly in response to new information but do not adjust durable purchases. Homeowners update their beliefs more modestly but significantly increase durable spending when they do. This negative covariance between belief updating and spending response implies that average estimates conflate groups with opposite behavior. We trace the asymmetry to differences both in attention to inflation and in the available margins of adjustment: homeowners act through durables, while renters, who are more likely to be liquidity constrained, increase nondurable spending in the short run. These findings have implications for the design of central bank communication, the measurement of expectation-spending elasticities, and the modeling of heterogeneous attention in HANK frameworks.

JEL-codes: C93 D12 D84 E21 E31 R21 (search for similar items in EconPapers)
Date: 2025-03
New Economics Papers: this item is included in nep-exp and nep-mon
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Working Paper: Homeownership and Attention to Inflation: Evidence from Information Treatments (2025)
Working Paper: Homeownership and Attention to Inflation: Evidence from Information Treatments (2025)
Working Paper: Homeownership and Attention to Inflation: Evidence from Information Treatments (2025)
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