NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Dimitris Georgarakos

European Central Bank
Sonnemannstrasse 20 (Main Building)
60314 Frankfurt am Main
Germany
Tel: +49 (0) 69 1344 4843

E-Mail: dimitris.georgarakos@ecb.int
Institutional Affiliation: European Central Bank

NBER Working Papers and Publications

July 2019How Does Consumption Respond to News about Inflation? Field Evidence from a Randomized Control Trial
with Olivier Coibion, Yuriy Gorodnichenko, Maarten van Rooij: w26106
We implement a survey of Dutch households in which random subsets of respondents receive information about inflation. The resulting exogenously generated variation in inflation expectations is used to assess how expectations affect subsequent monthly consumption decisions relative to those in a control group. The causal effects of elevated inflation expectations on non-durable spending are imprecisely estimated but there is a sharp negative effect on durable spending. We provide evidence that this is likely driven by the fact that Dutch households seem to become more pessimistic about their real income as well as aggregate spending when they increase their inflation expectations. There is little evidence to support the idea that the degree to which respondents change their beliefs or their...
June 2019Wealth Shocks and MPC Heterogeneity
with Dimitris Christelis, Tullio Jappelli, Luigi Pistaferri, Maarten van Rooij: w25999
We use the responses of a representative sample of Dutch households to survey questions that ask how much their consumption would change in response to unexpected, permanent, positive or negative shocks to their home value. The average MPC is in the 2.1-4.7% range, in line with econometric estimates that use housing wealth and consumption realizations. However, our analysis uncovers significant sample heterogeneity, with over 90% of the sample reporting no consumption adjustment to positive or negative wealth shocks. The relation between the MPC from wealth shocks and cash-on-hand is negative, consistent with models with precautionary saving and liquidity constraints.
 
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