TY  - RPRT
        AU  - Georgarakos, Dimitris
AU  - Gorodnichenko, Yuriy
AU  - Coibion, Olivier
AU  - Kenny, Geoff
        TI  - The Causal Effects of Inflation Uncertainty on Households' Beliefs and Actions
        PY  - 2024/Sep/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17317
        UR  - https://www.iza.org/index.php/publications/dp17317
        AB  - We implement a survey-based randomized information treatment that generates independent variation in the inflation expectations and the uncertainty about future inflation of European households. This variation allows us to assess how both first and second moments of inflation expectations separately affect subsequent household decisions. We document several key findings. First, higher inflation uncertainty leads households to reduce their subsequent durable goods purchases for several months, while a higher expected level of inflation increases them. Second, an increase in uncertainty about inflation induces households to tilt their portfolios towards safe and away from riskier asset holdings. 
Third, higher inflation uncertainty encourages household job search, leading to higher subsequent employment among the unemployed and less under-employment among the employed. Finally, we document that the level of inflation expectations has a different effect from uncertainty in inflation expectations and thus it is crucial to take into account both to measure their separate effects on decisions.
        KW  - inflation uncertainty
KW  - consumption
KW  - household finance
KW  - labor supply
KW  - consumer expectations survey
        ER  -