Are Consumers' Spending Decisions in Line with A Euler Equation?

Abstract Evaluating a new survey of German consumers, we test whether individual consumption spending decisions are formed according to Euler equation model. We find that consumers more likely increase current if they plan in the future and expect higher inflation. In subsample financially literate households, an additional negative effect nominal interest rate expectations. The effects macroeconomic expectations become stronger observed news on monetary policy or financial markets. These particularly pronounced for who save those with low inflation forecast accuracy.