Table 4.
Inflation uncertainty and precautionary saving, focusing on 2020 CARES Act stimulus check.
| (1) | (2) | (3) | |
|---|---|---|---|
| 1-yr inflationexpectation change | −0.49 | −0.44 | −0.27 |
| (0.46) | (0.45) | (0.46) | |
| 1-yr inflationuncertainty change | 1.77∗∗∗ | 1.55∗∗∗ | 1.55∗∗∗ |
| (0.57) | (0.58) | (0.58) | |
| N | 474 | 474 | 473 |
| R2 | 0.02 | 0.07 | 0.09 |
| Dependent variable mean | 39.08 | 39.08 | 39.03 |
| Constant | X | X | X |
| Demographic characteristics | X | X | |
| Additional controls | X |
Notes: The dependent variable is the share saved out of the respondent's stimulus check, as reported in the June SCE special module. Column 1 reports results for a specification which includes as covariates only the change (between February and June) in inflation expectations and in inflation uncertainty at the one-year ahead horizon. Column 2 adds dummy variables for the following self-reported demographic characteristics: female, greater than 40 years old, residing in a household with children under 18 years old, white, education level of bachelor's degree or higher, household income greater than or equal to $60,000, and high numeracy. High numeracy is defined as correctly answering at least 4 out of 5 financial literacy questions. Finally, column 3 controls for receiving a negative labor market shock and experiencing an income drop, the respondent's attitude towards financial risk, and the expected change in household income at the one-year ahead horizon. A negative labor market shock is defined as a dummy variable equal to 1 for having experienced a forced leave, furlough, or layoff since the onset of the pandemic. An income drop is defined as a dummy variable equal to 1 for having experienced a decrease in household income from February to June. The respondent's attitude towards financial risk is a Likert scale from 1 (not willing at all to take risks regarding financial matters) to 7 (very willing to take risks regarding financial matters). The sample consists of those who took both the February SCE monthly survey and the June SCE special module and reported receiving a stimulus check in June. The data are trimmed weekly at the top and bottom 2% to remove outliers. ∗p < 0.1,∗∗p < 0.05,∗∗∗p < 0.01.