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Standard theoretical models predict that higher inflation expectations generate greater current consumer spending at the zero lower bound of interest rates. However, recent empirical studies using U.S. micro data find negative results for this relationship. We use micro data for Japan, which has experienced low interest rates for a prolonged period, to estimate ordered probit models with a variety of controls. We find robust evidence supporting the prediction of standard models: survey respondents with higher expected inflation tend to indicate that their household has increased real spending compared with 1 year ago but will decrease it in the future. This relationship appears to be stronger for asset holders and older people. ( JEL E20, E21, E30, E31, E50, E52) [ABSTRACT FROM AUTHOR]

The industrialization of shoemaking occurred in small towns in antebellum New England in which capital formation was severely hampered by currency and credit problems prior to the Legal Tender Act of 1862. In a comparison of two communities, it was discovered that the construction of a railroad had different results depending on the structural ties between the community and the railroad. In one community, the railroad drew external capital to the community that provided the basis for a crucial expansion of scale of shoe production prior to the rise of the factory system. In the other, it depleted local capital, ending the shoe industry and damaging most other local economic activities as well. [ABSTRACT FROM AUTHOR]