IDEAS home Printed from https://ideas.repec.org/p/zbw/safewp/250.html
   My bibliography  Save this paper

Inflation expectations and choices of households

Author

Listed:
  • Vellekoop, Nathanael
  • Wiederholt, Mirko

Abstract

Do household in ation expectations affect consumption-savings decisions? We link survey data on quantitative in ation expectations to administrative data on income and wealth. We document that households with higher in ation expectations save less. Estimating panel data models with year and household fixed effects, we find that a one percentage point increase in a household's in ation expectation over time is associated with a 250-400 euro reduction in the household's change in net worth per year on average. We also document that households with higher in ation expectations are more likely to acquire a car and acquire higher-value cars. In addition, we provide a quantitative model of household-level in ation expectations.

Suggested Citation

  • Vellekoop, Nathanael & Wiederholt, Mirko, 2019. "Inflation expectations and choices of households," SAFE Working Paper Series 250, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
  • Handle: RePEc:zbw:safewp:250
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/196146/1/1664862439.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Philippe Andrade & Gaetano Gaballo & Eric Mengus & Benoît Mojon, 2019. "Forward Guidance and Heterogeneous Beliefs," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(3), pages 1-29, July.
    2. Patton, Andrew J. & Timmermann, Allan, 2010. "Why do forecasters disagree? Lessons from the term structure of cross-sectional dispersion," Journal of Monetary Economics, Elsevier, vol. 57(7), pages 803-820, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Coibion, Olivier & Georgarakos, Dimitris & Gorodnichenko, Yuriy & van Rooij, Maarten, 2019. "How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial," IZA Discussion Papers 12498, Institute of Labor Economics (IZA).
    2. Goldfayn-Frank, Olga & Wohlfart, Johannes, 2018. "How do consumers adapt to a new environment in their economic forecasting? Evidence from the German reunification," IMFS Working Paper Series 129, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    3. repec:oup:jeurec:v:16:y:2018:i:3:p:563-603. is not listed on IDEAS
    4. George-Marios Angeletos, 2017. "Frictional Coordination," NBER Working Papers 24178, National Bureau of Economic Research, Inc.
    5. Jarko Fidrmuc & Christa Hainz & Werner Hölzl, 2018. "Individual Credit Market Experience and Perception of Aggregate Bank Lending. Evidence from a Firm Survey," WIFO Working Papers 574, WIFO.
    6. Lieb, Lenard & Schuffels, Johannes, 2019. "Inflation expectations and consumer spending: the role of household balance sheets," Research Memorandum 022, Maastricht University, Graduate School of Business and Economics (GSBE).
    7. George-Marios Angeletos & Zhen Huo, 2018. "Collective Myopia and Habit," 2018 Meeting Papers 236, Society for Economic Dynamics.
    8. Stanisławska, Ewa & Paloviita, Maritta & Łyziak, Tomasz, 2019. "Assessing reliability of aggregated inflation views in the European Commission consumer survey," Research Discussion Papers 10/2019, Bank of Finland.
    9. repec:ces:ifowes:v:18:y:2019:i:03:p:01-26 is not listed on IDEAS

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:safewp:250. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - Leibniz Information Centre for Economics). General contact details of provider: http://edirc.repec.org/data/csafede.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.