Working Paper

The asymmetric effects of deflation on consumption spending: evidence from the Great Depression

Abstract: Does expected deflation lead to a fall in consumption spending? Using data for U.S. grocery store sales and department store sales from 1919 to 1939, this paper shows that expected price changes have asymmetric effects on consumption spending. Department store sales (durable consumption) react negatively to the expectation of falling prices, but grocery store sales (non-durable consumption) do not react to expected price changes.

JEL Classification: E20; N10;

https://doi.org/10.24149/gwp226

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Globalization Institute Working Papers

Publication Date: 2015-02-01

Number: 226

Note: Published as: Davis, J. Scott (2015), "The Asymmetric Effects of Deflation On Consumption Spending: Evidence from the Great Depression," Economic Letters 130: 105-108.