How does currency depreciation impact consumer buying behavior?
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Currency depreciation has an impact on consumer buying behavior. In the short run, currency devaluation can lead to a decline in domestic consumption by redistributing income from workers with high marginal propensity to consume (MPC) to producers with low MPC . During a currency crisis, per capita consumption expenditures and per capita retail sales decrease, with little evidence of intertemporal consumption smoothing . An increase in income due to currency depreciation leads to a decrease in the share spent on basic necessities and an increase in spending on luxury goods and spiritual development . Additionally, individuals tend to mentally track the costs and benefits of a consumer transaction, which can lead to an irrational attention to sunk costs. However, consumers gradually adapt to historic costs over time, decreasing the impact of sunk costs on consumption . Overall, currency depreciation affects consumer buying behavior through income redistribution, changes in consumption patterns, and the consideration of sunk costs.
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| The paper does not directly address the impact of currency depreciation on consumer buying behavior. | |
| The provided paper does not discuss currency depreciation or its impact on consumer buying behavior. | |
05 Oct 2021 3 Citations | The provided paper does not specifically discuss the impact of currency depreciation on consumer buying behavior. The paper focuses on the influence of changing monetary income on consumer behavior. |
| The paper does not directly address the impact of currency depreciation on consumer buying behavior. The paper focuses on the impact of a currency crisis on consumption in an economy, including the reduction of per capita consumption expenditures and per capita retail sales. | |
Open access•Posted Content 01 Jan 2012 4 Citations | The paper states that currency devaluation can lead to a decline in domestic consumption in the short run, but not in the long run. |
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