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The Relationship between Inflation Expectations and Consumption in Exceptional Times: Evidence from Thailand and Vietnam during the COVID-19 Pandemic

Author

Listed:
  • Dzung Bui

    (Philipps-Universität Marburg, School of Business and Economics)

  • Bernd Hayo

    (Philipps-Universität Marburg, School of Business and Economics)

Abstract

Using representative household surveys conducted during the COVID-19 pandemic in two emerging economies, Thailand and Vietnam, we examine the relationship between inflation expectations and consumption. In both countries, our results show an insignificant relationship between expected inflation and durable consumption intentions. In addition, we rigorously test whether the null overall effect of inflation expectations on consumption is due to heterogeneity across different groups of households. However, we cannot reject the homogeneity restriction and conclude that we find no evidence to support either the widely accepted intertemporal optimisation theory or the competing 'stagflationary' view of consumption.

Suggested Citation

  • Dzung Bui & Bernd Hayo, 2024. "The Relationship between Inflation Expectations and Consumption in Exceptional Times: Evidence from Thailand and Vietnam during the COVID-19 Pandemic," MAGKS Papers on Economics 202408, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:202408
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    File URL: https://uni-marburg.de/en/fb02/research-groups/economics/macroeconomics/research/magks-joint-discussion-papers-in-economics/papers/2024/08-2024_hayo.pdf
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    More about this item

    Keywords

    Inflation expectations; consumption; COVID-19; Thailand; Vietnam;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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