Brown, S. orcid.org/0000-0002-4853-9115, Harris, M.N., Spencer, C. et al. (1 more author) (2020) Financial expectations and household consumption : does middle inflation matter? Working Paper. Sheffield Economic Research Paper Series, 2020002 (2020002). Department of Economics, University of Sheffield ISSN 1749-8368
Abstract
Using British panel data, we explore the Finding that households often expect their financial position to remain unchanged compared to other alternatives, using a generalised middle inflated ordered probit (GMIOP) model. In doing so we account for the tendency of individuals to choose ‘neutral’ responses when faced with attitudinal and opinion-based questions, which are a common feature of survey data. Our empirical analysis strongly supports the use of a GMIOP model to account for this response pattern. Expectations indices based on competing discrete choice models are then exploited to explore the role that financial expectations play in driving the consumption of different types of durable goods and the amount of expenditure undertaken. Whilst financial optimism is significantly associated with consumption, indices which fail to take into account middle-inflation are found to overestimate the impact of financial expectations.
Metadata
Item Type: | Monograph |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2020 The Author(s). For reuse permissions, please contact the Author(s). |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) > Sheffield Economics Research Papers Series The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 07 Feb 2020 15:58 |
Last Modified: | 07 Feb 2020 16:01 |
Published Version: | https://www.sheffield.ac.uk/media/8858/download |
Status: | Published |
Publisher: | Department of Economics, University of Sheffield |
Series Name: | Sheffield Economic Research Paper Series |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:156456 |