Events at CERGE-EI
Thursday, 23 May, 2024 | 14:00 | Room 402 | Macro Research Seminar
Michael Weber (University of Chicago Booth School of Business) "Households' Response to the Wealth Effects of Inflation"
University of Chicago Booth School of Business, United States
Authors: Michael Weber, Philip Schnorpfeil, Andreas Hackethal
Abstract: We study the redistributive effects of surprise in ation combining administrative bank data with an information provision experiment during an episode of historic inflation. On average, households are well-informed about prevailing in ation and are concerned about its impact on their wealth; yet, while many households know about inflation eroding nominal assets, most are unaware of nominal-debt erosion. Once they receive information on the debt-erosion channel, households view nominal debt more positively and increase estimates of their own real net wealth. These changes causally affect actual consumption and hypothetical debt decisions. Our findings suggest that real wealth mediates the sensitivity of consumption to inflation once households are aware of the wealth effects of inflation.
JEL Classification: D12, D14, D83, D84, E21, E31, E52
Keywords: Inflation Beliefs, Information Treatment, Consumption, Monetary Policy
Full Text: Households' Response to the Wealth Effects of Inflation
