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Brown, S. orcid.org/0000-0002-4853-9115, Harris, M.N., Spencer, C. et al. (1 more author) (Submitted: 2020) Financial expectations and household consumption: does middle inflation matter? Discussion Paper. IZA Discussion Paper (13023). IZA Institute of Labor Economics ISSN 2365-9793
Abstract
Using British panel data, we explore the finding that households often expect theirÂ…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 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). |
Keywords: | household consumption; financial expectations; survey data; generalised middle-inflated ordered probit model |
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) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 05 Apr 2023 15:52 |
Last Modified: | 12 Mar 2025 14:26 |
Published Version: | https://www.iza.org/publications/dp/13023/financia... |
Status: | Published |
Publisher: | IZA Institute of Labor Economics |
Series Name: | IZA Discussion Paper |
Identification Number: | 10.2139/ssrn.3558322 |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:197639 |
Available Versions of this Item
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