engleski

Assessing the sensitivity of consumption expenditures to inflation sentiment : case of post communist economies

The aim of this article is to examine the influence of inflation sentiment on aggregate consumption. This paper adds to the existing literature by i) emphasizing the role of inflation perceptions and expectations in determining consumption patterns, ii) using structural VAR methodology that has not yet been applied in consumer studies, iii) relying on an extensive dataset of 8 individual post-communist countries (Czech Republic, Estonia, Hungary, Lithuania, Poland, Romania, Slovakia and Slovenia). Using innovation analysis it is proven that the theoretically expected conclusions are valid: consumers instantaneously decrease their consumption expenditures in response to shocks in perceived inflation, while their reaction on near- term inflation expectations shocks is effectuated in an abrupt (but temporarily) consumption boost.

perceived inflation; expected inflation; consumption; structural VAR; consumer surveys

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