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The central aim is to understand how inflation expectations influence household spending behaviors and the underlying mechanisms involved.

How Do Households Respond to Expected Inflation? An Investigation of Transmission Mechanisms,

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The central aim is to understand how inflation expectations influence household spending behaviors and the underlying mechanisms involved.
Conducted surveys with hypothetical scenarios about increased inflation expectations.
Analyzed household spending adjustments and reasons for changes in spending patterns.
Most households did not change their spending plans, viewing inflation expectations as irrelevant.
Among those who adjusted, most decreased spending due to wealth effects.
Financial conditions and cognitive ability predict spending responses, highlighting key predictive mechanisms.

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Investigation reveals how households adjust spending in response to inflation expectations, indicating crucial frictions in theoretical models.

Jiang et al. (2026) studied this question.

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Investigation reveals how households adjust spending in response to inflation expectations, indicating crucial frictions in theoretical models.