American Economic Review Vol. 114 No. 3 2024

The Effect of Macroeconomic Uncertainty on Household Spending

Olivier Coibion¹; Dimitris Georgarakos²; Yuriy Gorodnichenko³; Geoff Kenny²; Michael Weber⁴

¹ University of Texas, Austin (email: ) · ² European Central Bank (email: ) · ³ University of California, Berkeley (email: ) · ⁴ Booth School of Business, University of Chicago (email: )

Abstract

We use randomized treatments that provide different types of information about the first and/or second moments of future economic growth to generate exogenous changes in the perceived macroeconomic uncertainty of treated households. The effects on their spending decisions relative to an untreated control group are measured in follow-up surveys. Our results indicate that, after taking into account first moments, higher macroeconomic uncertainty induces households to significantly and persistently reduce their total monthly spending in subsequent months. Changes in spending are broad based across spending categories and apply to larger durable good purchases as well.

DOI

10.1257/aer.20221167

Volume

114

Issue

3

Pages

645-677

Language

en

Sources

crossref bibtex:phds-export.bib openalex

Cite

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