Working Paper: NBER ID: w31672
Authors: Philip Schnorpfeil; Michael Weber; Andreas Hackethal
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: No keywords provided
JEL Codes: D12; D14; D83; D84; E21; E31; E52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Information about nominal debt erosion (H63) | Beliefs about real net wealth and nominal positions (E21) |
| Beliefs about real net wealth and nominal positions (E21) | Higher planned consumption (E21) |
| Beliefs about real net wealth and nominal positions (E21) | Actual spending (H61) |
| Learning about debt erosion (G51) | Changes in spending behavior (D12) |
| Information about nominal debt erosion (H63) | Actual spending (H61) |
| Information about nominal debt erosion (H63) | Higher planned consumption (E21) |