Beyond the headline: How personal exposure to inflation shapes the financial choices of households

• 成果类型: Article
• 署名作者: Kukk, Merike; Toczynski, Jan; Basten, Christoph
• 署名单位: Tallinn University of Technology; Bank of Estonia (Eesti Pank); Aalto University; University of London; Queen Mary University London; European Central Bank
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2025.103800
• 发表日期: 2025
• 关键词: Inflation heterogeneity; Personal inflation exposure; Consumption spending; borrowing; Interactive fixed effects; intertemporal substitution

摘要

Using a unique set of bank account-level data from a period of volatile inflation in a small open economy in 2005-11 and interactive fixed effect estimation, we find that individual consumption spending responds to personal inflation exposure beyond the headline rate. Households are exposed to different inflation because they have different expenditure baskets. For each percentage point of higher personal inflation rate, they increase their spending by 1.4%. These responses are consistent with intertemporal substitution when households form their inflation expectations from their personal experience. Increased spending is financed with savings or borrowing, except when households are liquidity-constrained or over-indebted. Extra demand when inflation is already high can make inflation persistent and dependent on its current distribution.