We study the redistributive eﬀects of inﬂation combining administrative bank data with an information provision experiment during an episode of historic inﬂation. On average, households are well-informed about prevailing inﬂation and are concerned about its impact on their wealth; yet, while many households know about inﬂation eroding nominal assets, most are unaware of nominal-debt erosion. Once they receive information on the debt-erosion channel, households update upwards their beliefs about nominal debt and their own real net wealth. These changes in beliefs causally aﬀect actual consumption and hypothetical debt decisions. Our ﬁndings suggest that real wealth mediates the sensitivity of consumption to inﬂation once households are aware of the wealth eﬀects of inﬂation.
SAFE Working Paper No. 400