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Household Responses to Fiscal News Shocks

Last registered on November 19, 2024
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Pre-Trial

Trial Information

General Information

Title
Household Responses to Fiscal News Shocks
RCT ID
AEARCTR-0014835
Initial registration date
November 18, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
November 19, 2024, 3:57 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Germany
Region
North Rhine-Westphalia

Primary Investigator

Name
Nils Blossey
Affiliation
University of Cologne
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Adrian Schröder
PI Affiliation
University of Münster
Contact Investigator

Additional Trial Information

Status
In development
Start date
2024-12-02
End date
2024-12-23
Keywords
Behavior
Additional Keywords
Government spending, fiscal policy, expectation formation, mental models
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We examine the effects of government spending on household consumption and macroeconomic expectations through an information provision experiment. We experimentally shift expectations about the growth of government consumption and investment spending using forecasts from the Survey of Professional Forecasters. First, we examine the quality of households' fiscal expectations compared to professional forecasters and evaluate the extent to which households update their expectations upon receiving information about the expected fiscal stance. Second, we estimate the impact of the fiscal news shock on the intra-individual change between past household consumption in 2024 and expected household consumption in 2025. Additionally, we analyze qualitative changes in consumer behavior and income expectations. We then explore whether households associate the fiscal news shock with inflation and increased taxation in both the short and long run. Finally, we use open-ended questions to explore how individuals relate the fiscal stance to their own economic behavior and expectations. We use a follow-up survey to ascertain whether the effects persisted over time.
External Link(s)

Registration Citation

Citation
Blossey, Nils and Adrian Schröder. 2024. "Household Responses to Fiscal News Shocks." AEA RCT Registry. November 19. https://doi.org/10.1257/rct.14835-1.0
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
We experimentally shift respondents' fiscal expectations by presenting them with varying information about government spending growth in 2025 relative to 2024, calibrated using data from the Survey of Professional Forecasters. The treatment group receives information about the upper bound of spending growth among professional forecasters, while the active control group is presented with information about a neutral fiscal stance, calibrated as the lowest positive growth rate.
Intervention (Hidden)
Intervention Start Date
2024-12-02
Intervention End Date
2024-12-11

Primary Outcomes

Primary Outcomes (end points)
Household consumption growth
Primary Outcomes (explanation)
Household consumption growth is computed as the percentage change between the annualized values of planned (and expected) average monthly spending on all goods and services in 2024 and 2025. We use the expected inflation rate in 2025 to compute real instead of nominal consumption growth. We also capture the qualitative changes in total household consumption and its various components in the posterior block. We allow respondents to elaborate on their expected changes in consumer spending in an open-ended question.

Secondary Outcomes

Secondary Outcomes (end points)
Tax expectations, inflation rate, income expectations
Secondary Outcomes (explanation)
We measure tax expectations as the expected qualitative change in the personal income tax rate in the next 12 months (short-run) and over the next 5 years (long-run). We elicit individual expectations about the inflation rate in percent as a numerical value. We elicit income expectations as the qualitative change in household gross income in 2025 compared to 2024. Finally, we allow respondents to elaborate on their personal income tax expectations and their general understanding of the relationship between government spending and their own economic decisions in two open-ended questions.

Experimental Design

Experimental Design
Our experimental design is structured as follows: We first elicit respondents' beliefs about the 2024 government spending growth rate and then provide the actual projected growth rate (SPF 2024:IV) as an anchor. Second, we elicit prior expectations about the expected growth rate of government spending on investment and consumption for the upcoming year, 2025. Third, respondents receive varying information about the spending growth rate from the SPF. The treatment group receives information calibrated with the upper bound of professional spending forecasts, while the active control group receives information about the growth rate calibrated as the lowest positive growth rate.
Experimental Design Details
Randomization Method
Randomization is done by the computer.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
0
Sample size: planned number of observations
1,600
Sample size (or number of clusters) by treatment arms
800 treatment, 800 active control
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
University of Cologne. Ethical Review Board Faculty of Management, Economics, and Social Sciences
IRB Approval Date
2024-09-03
IRB Approval Number
240049NB
Analysis Plan

Analysis Plan Documents

Analysis Plan

MD5: 90b4cbe0820bd04bca29d4b890d5236f

SHA1: b9f91d68174756b4d4559175722f10522eb394d7

Uploaded At: November 18, 2024

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials