Understanding the Impact of Severe Hyperinflation Experience on Current Household Investment Behavior

Journal of Behavioral and Experimental Finance, Vol. 17, No. 1, pp. 60-67, 2018.

25 Pages Posted: 20 Jun 2013 Last revised: 13 Dec 2020

See all articles by José Fajardo

José Fajardo

Getulio Vargas Foundation

Manuela Dantas

California State University, Northridge

Date Written: April 1, 2014

Abstract

We propose that a hyperinflation event has a long-lasting effect on household investment behavior. We want to investigate whether future stock market participation can be influenced by a single extreme macroeconomic instability episode. We use data from the Brazilian Institute of Geography and Statistics and find that households who experienced hyperinflation as young adults (i) show lower willingness to invest in stocks than others, and (ii) are less likely to save for the future. Results hold after controlling for various household characteristics and other macroeconomic events.

Keywords: Hyperinflation, Investments, Household Behavior

JEL Classification: D03, D14, D83, D84, E21, G11

Suggested Citation

Fajardo, José and Dantas, Manuela, Understanding the Impact of Severe Hyperinflation Experience on Current Household Investment Behavior (April 1, 2014). Journal of Behavioral and Experimental Finance, Vol. 17, No. 1, pp. 60-67, 2018., Available at SSRN: https://ssrn.com/abstract=2281441 or http://dx.doi.org/10.2139/ssrn.2281441

José Fajardo (Contact Author)

Getulio Vargas Foundation ( email )

Brazil
55213799 5781 (Phone)

HOME PAGE: http://www.josefajardo.com

Manuela Dantas

California State University, Northridge ( email )

Northridge, CA 91330
United States
8186772419 (Phone)
91330-8372 (Fax)

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