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The asymmetric effects of deflation on consumption spending: Evidence from the great depression

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  • Davis, J. Scott

Abstract

Using data for U.S. grocery and department store sales from 1919–1939, this paper shows that expected price changes have asymmetric effects on consumption spending. Department store sales (durable consumption) react negatively to expected deflation, but grocery sales (non-durable consumption) do not.

Suggested Citation

  • Davis, J. Scott, 2015. "The asymmetric effects of deflation on consumption spending: Evidence from the great depression," Economics Letters, Elsevier, vol. 130(C), pages 105-108.
    • Handle: RePEc:eee:ecolet:v:130:y:2015:i:c:p:105-108
    DOI: 10.1016/j.econlet.2015.03.016
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    7. Leamer Edward E, 2011. "Deflation Dread Disorder "The CPI is Falling!"," The Economists' Voice, De Gruyter, vol. 8(1), pages 1-5, February.
    8. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
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    10. Jens H. E. Christensen, 2009. "Inflation expectations and the risk of deflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov2.
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    Cited by:

    1. Binder, Carola Conces, 2016. "Estimation of historical inflation expectations," Explorations in Economic History, Elsevier, vol. 61(C), pages 1-31.

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    More about this item

    Keywords

    Deflation; Consumption; Durable goods; Non-durable goods;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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