How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial

Olivier Coibion, Dimitris Georgarakos, Yuriy Gorodnichenko and Maarten van Rooij

Department of Economics, Working Paper Series from Department of Economics, Institute for Business and Economic Research, UC Berkeley

Abstract: We implement a survey of Dutch households in which random subsets of respondents receive information about inflation. The resulting exog-enously generated variation in inflation expectations is used to assess how expectations affect consumption decisions. The causal effects of reduced inflation expectations on nondurable spending are imprecisely estimated, but there is a sharp positive effect on durable spending. This is likely driven by the fact that Dutch households seem to become more optimistic about their real income and aggregate spending when they decrease their inflation expectations. We find little role for cognitive or financial constraints in explaining spending responses. (JEL C83, D12, D83, D84, E21, E31)

Keywords: Aging; survey data; inflation expectations; households; durable and non-durable consumption; randomized control trial; Economics (search for similar items in EconPapers)
Date: 2023-07-01
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Citations: View citations in EconPapers (31)

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Related works:
Journal Article: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2023)
Working Paper: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2019)
Working Paper: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2019)
Working Paper: How Does Consumption Respond to News About Inflation? Field Evidence from a Randomized Control Trial (2019)
Working Paper: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2019)
Working Paper: How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial (2019)
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