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Inflation Expectations and Spending: Evidence from an Experiment and Bank Transaction Data in Japan

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  • Kozo UEDA

Abstract

This study investigates whether information provision on inflation influences household inflation expectations and actual spending in Japan. Using a randomized controlled trial with approximately 2,500 bank account holders, I find that information provision significantly shapes inflation expectations, with respondents adjusting their expectations in line with the information received. However, this adjustment in expectations does not translate into changes in actual spending behavior, as observed through outflow transactions. These findings underscore the challenge of managing inflation expectations.

Suggested Citation

  • Kozo UEDA, 2024. "Inflation Expectations and Spending: Evidence from an Experiment and Bank Transaction Data in Japan," CIGS Working Paper Series 24-021E, The Canon Institute for Global Studies.
    • Handle: RePEc:cnn:wpaper:24-021e
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    File URL: https://cigs.canon/en/uploads/2024/10/WP24-021E_ueda.pdf
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    References listed on IDEAS

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    1. Duca-Radu, Ioana & Kenny, Geoff & Reuter, Andreas, 2021. "Inflation expectations, consumption and the lower bound: Micro evidence from a large multi-country survey," Journal of Monetary Economics, Elsevier, vol. 118(C), pages 120-134.
    2. Olivier Coibion & Dimitris Georgarakos & Yuriy Gorodnichenko & Maarten van Rooij, 2023. "How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(3), pages 109-152, July.
    3. Michiru Kaneda & So Kubota & Satoshi Tanaka, 2021. "Who spent their COVID-19 stimulus payment? Evidence from personal finance software in Japan," The Japanese Economic Review, Springer, vol. 72(3), pages 409-437, July.
    4. Michael Weber & Francesco D'Acunto & Yuriy Gorodnichenko & Olivier Coibion, 2022. "The Subjective Inflation Expectations of Households and Firms: Measurement, Determinants, and Implications," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 157-184, Summer.
    5. Andrade, Philippe & Gautier, Erwan & Mengus, Eric, 2023. "What matters in households’ inflation expectations?," Journal of Monetary Economics, Elsevier, vol. 138(C), pages 50-68.
    6. Jess Diamond & Kota Watanabe & Tsutomu Watanabe, 2020. "The Formation Of Consumer Inflation Expectations: New Evidence From Japan'S Deflation Experience," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(1), pages 241-281, February.
    7. Kubota, So & Onishi, Koichiro & Toyama, Yuta, 2021. "Consumption responses to COVID-19 payments: Evidence from a natural experiment and bank account data," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 1-17.
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    Cited by:

    1. Ueda, Kozo, 2025. "The reality of consumption: Comparing self-reported and observed marginal propensity to consume," Economics Letters, Elsevier, vol. 247(C).

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