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Fiscal Expansion and Households' Income Inequality Expectations: A Survey Experiment

Author

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  • Ludolph, Melina
  • Nghiem, Giang
  • Tonzer, Lena

Abstract

We study how individuals' views on current and future levels of income inequality change during periods of expansionary fiscal policy. In a randomized controlled trial (RCT), we provide information on fiscal expansion to a representative sample of the German population. Our findings reveal that combining a fact-based (numerical) information treatment with a narrative treatment about fiscal expansion plans reduces inequality expectations among respondents who are ex-ante dissatisfied with the government's economic policy. These effects are more pronounced among respondents without a college degree or with low political interest, highlighting the importance of narrative information for individuals who are likely to benefit most from it. We explore potential mechanisms by examining revisions in macro- and micro-level assessments of future economic conditions and find that respondents primarily update their expectations regarding economic growth and individual layoff risk

Suggested Citation

  • Ludolph, Melina & Nghiem, Giang & Tonzer, Lena, 2026. "Fiscal Expansion and Households' Income Inequality Expectations: A Survey Experiment," Hannover Economic Papers (HEP) dp-744, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    • Handle: RePEc:han:dpaper:dp-744
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    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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