Households' response to the wealth effects of inflation

Philip Schnorpfeil, Michael Weber and Andreas Hackethal

No 728, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: We study households' response to the redistributive effects of inflation combining bank data with an information experiment during historic inflation. Households are generally well-informed about inflation and concerned about its wealth impact; yet, while knowledge about inflation eroding nominal assets is widespread, most households are unaware of nominal-debt erosion. When informed about the latter, households view nominal debt more positively and increase estimates of their real net wealth. These changes causally affect actual consumption and hypothetical debt decisions. Our findings suggest real wealth mediates the sensitivity of consumption to inflation once households are aware of the wealth effects of inflation.

Keywords: Inflation Beliefs; Information Treatment; Consumption; Monetary Policy (search for similar items in EconPapers)
JEL-codes: D12 D14 D83 D84 E21 E31 E52 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-mon
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https://www.econstor.eu/bitstream/10419/308805/1/1914524969.pdf (application/pdf)

Related works:
Working Paper: Households' response to the wealth effects of inflation (2024)
Working Paper: Households' Response to the Wealth Effects of Inflation (2024)
Working Paper: Households’ Response to the Wealth Effects of Inflation (2023)
Working Paper: Households' response to the wealth effects of inflation (2023)
Working Paper: Households' Response to the Wealth Effects of Inflation (2023)
Working Paper: Households' response to the wealth effects of inflation (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:308805

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