Households’ Response to the Wealth Effects of Inflation

Philip Schnorpfeil, Michael Weber, Andreas Hackethal and Michael Weber
Authors registered in the RePEc Author Service: Michael Weber

No 10648, CESifo Working Paper Series from CESifo

Abstract: We study the redistributive effects of inflation combining administrative bank data with an information provision experiment during an episode of historic inflation. On average, households are well-informed about prevailing inflation 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 update upwards their beliefs about nominal debt and their own real net wealth. These changes in beliefs 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.

Keywords: inflation beliefs; information treatment; consumption; monetary policy (search for similar items in EconPapers)
JEL-codes: D12 D14 D83 D84 E21 E31 E52 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ban, nep-ger and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Households' response to the wealth effects of inflation (2024)
Working Paper: Households' Response to the Wealth Effects of Inflation (2024)
Working Paper: Households' response to the wealth effects of inflation (2023)
Working Paper: Households' Response to the Wealth Effects of Inflation (2023)
Working Paper: Households' response to the wealth effects of inflation (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10648

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