A1364
Title: Paying for the prices: The cost of taming inflation
Authors: Andre Casalis - National Bank of Slovakia (Slovakia) [presenting]
Abstract: Using high-frequency data on individual bank account transactions and card payments, the impact of monetary policy is investigated on consumption at daily frequency, and the focus is on the magnitude and transmission dynamics of interest rate shocks. The granularity of the data allows building consumption series segmented by age, gender, education level, and region to explore asymmetric features of monetary policy transmission. A parsimonious local projection specification allows flexible inclusion of a variety of controls to explore the consumption effects of the full maturity profile of the yield curve, and to disentangle extensive and intensive margins contribution. Furthermore, a nonlinear extension of the framework is able to identify the effects of positive and negative monetary policy shocks. A selection of findings includes: (a) household spending reaction peaks approximately eleven months after the initial shock; (b) negative shocks are definitely contractionary, while positive shocks are unable to show a decisive expansionary effect; (c) interest rate shocks from the short and medium-term maturities do not present significant differences in the way in which they affect consumption, while longer term maturities transmits quicker to household spending; (d) monetary policy is symmetric in its effects and transmission timing across the demographic dimensions of age, sex, education, and region.
