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Monetary Policy and Credit Card Spending

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  • Mr. Francesco Grigoli
  • Mr. Damiano Sandri

Abstract

We analyze the impact of monetary policy on consumer spending using credit card data. Because of their high frequency, these data improve identification and allow for a precise characterization of the transmission lags. We find that shocks to short-term interest rates affect spending much more rapidly than shocks to longer-term interest rates. We also detect significant asymmetries. While interest rate rises are contractionary, interest rate cuts are unable to lift spending. Finally, by exploiting the disaggregation of credit card data, we uncover considerable heterogeneity in the effects of monetary policy across spending categories and a stronger impact on higher-income users.

Suggested Citation

  • Mr. Francesco Grigoli & Mr. Damiano Sandri, 2022. "Monetary Policy and Credit Card Spending," IMF Working Papers 2022/255, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2022/255
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    Cited by:

    1. Winfried Koeniger & Peter Kress & Jonas Lehmann, 2024. "Consumption Expenditures in Austria & Germany: New Evidence Based on Transactional Data," CESifo Working Paper Series 11408, CESifo.

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    More about this item

    Keywords

    Credit card spending; heterogeneity; monetary policy; transmission; credit card data; IMF working paper research Department; interest rate cut; impact of monetary policy; interest rate rise; Consumer credit; Asset prices; Monetary tightening; Consumption; Negative interest rates;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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