• ISSN: 2010-023X (Print)
    • Abbreviated Title: Int. J. Trade, Economics and Financ.
    • Frequency: Quaterly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Managing Editor: Ms. Shira. W. Lu
    • Abstracting/ Indexing:  Crossref, Electronic Journals Library , EBSCO
    • E-mail: ijtef.editorial.office@gmail.com
HOME > Archive > 2021 > Volume 12 Number 3 (Jun. 2021) >
IJTEF 2021 Vol.12(3): 80-83 ISSN: 2010-023X
DOI: 10.18178/ijtef.2021.12.3.698

Inflation Expectation and Consumption: Evidence from CHFS Data

Yuxin Diao

Abstract—Engineering high inflation expectations has been proposed by economists and policymakers to stimulate consumption and GDP, especially when the nominal interest rate is approximately zero. This paper takes a close look at how individuals’ inflation expectation affects their readiness to spend. Households’ expectations about future economics affect their current consumption and there exists heterogeneous effect because of credit constraints. Using the cross-sectional data from China Household Finance Survey, we find that if households do not have credit constraints, those with positive inflation expectations spend 1437 RMB every year than those who expect the price level will stay the same or decrease. The effect of inflation expectations on consumption is insignificant for households with credit constraints. In addition, we further subdivide consumption into luxuries and necessities.

Index Terms—Consumption, credit constraints, inflation expectations, micro data.

Y. Diao is with the University of Minnesota, Minneapolis, MN 55414 USA (e-mail: diao0014@umn.edu).

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Cite: Yuxin Diao, "Inflation Expectation and Consumption: Evidence from CHFS Data," International Journal of Trade, Economics and Finance vol.12, no.3, pp. 80-83, 2021.

Copyright © 2021 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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