Publication Type
Journal Article
Version
publishedVersion
Publication Date
5-2022
Abstract
Motivated by the evidence that households purchased better quality goods across time in Singapore, we use a survey experiment to study the relationship between consumption upgrading and households’ beliefs about inflation. We find that providing price information on better-quality products will lead to higher inflation expectations. The effects on inflation expectations are smaller when price information on both higher- and lower-quality products is made available, suggesting that product replacement increases inflation expectations. Additional tests show that our results are not driven by mixing price with quality or numeracy. Our findings highlight the relationship between product replacement, product variety, and inflation expectations.
Keywords
Inflation expectations, Consumption, upgrading, Product Replacement, Survey Experiment
Discipline
Finance and Financial Management
Research Areas
Finance
Publication
Journal of Monetary Economics
Volume
128
First Page
124
Last Page
138
ISSN
0304-3932
Identifier
10.1016/j.jmoneco.2022.04.003
Publisher
Elsevier: 24 months
Citation
AGARWAL, Sumit; CHUA, Yeow Hwee; and SONG, Changcheng.
Inflation expectations of households and the upgrading channel. (2022). Journal of Monetary Economics. 128, 124-138.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7156
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jmoneco.2022.04.003