Monetary Policy and Credit Card Spending
IMF Working Papers, December 16, 2022
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Bibliographic details
- Authors: Francesco Grigoli, Damiano Sandri
- Published: December 16, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400225475.001
Summary and main findings
- High-frequency credit card data are used to analyze the impact of monetary policy on consumer spending, improving identification and allowing precise characterization of transmission lags.
- Shocks to short-term interest rates affect spending much more rapidly than shocks to longer-term interest rates.
- Significant asymmetries are detected:
- Interest rate rises are contractionary.
- Interest rate cuts are unable to lift spending.
- Disaggregation of credit card data reveals considerable heterogeneity in the effects of monetary policy across spending categories.
- Monetary policy has a stronger impact on higher-income users.
Data and identification
- Primary data: credit card spending at high frequency (credit card data).
- High-frequency nature of the data improves identification and allows precise measurement of transmission lags between monetary policy shocks and consumer spending responses.
Heterogeneity and distributional effects
- Effects vary considerably across spending categories (credit card spending disaggregation).
- Higher-income users experience a stronger impact from monetary policy changes.
Key technical points and emphases
- Focus on contrasting short-term versus longer-term interest rate shocks and their differing transmission speeds to spending.
- Emphasis on asymmetric responses to rate changes (rate rises versus rate cuts).
- Use of disaggregated, high-frequency transaction data to uncover heterogeneity not visible in aggregate series.
IMF Working Paper No. 2022/255
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