Impact of Behavioural Attention on the Households’ Foreign Currency Savings as a Response to the External Macroeconomic Shocks
Impact of Behavioural Attention on the Households’ Foreign Currency Savings as a Response to the External Macroeconomic Shocks

Summary/Abstract: This paper investigates the impact of behavioural attention on the households’ foreign currency savings as a response to the external macroeconomic shocks. The information that the households acquire via different communication channels is expected to influence their decisions regarding their savings’ allocation into different currencies. This study has applied the fundamental macroeconomic models by including individuals’ attention to the specific risks and search interest in specific keywords on Google in order to assess the impact of acquired information and its communication channel on the households’ foreign currency savings. We employed a twolevel mixed effects model including macroeconomic fundamentals and individuals’ attention to the information determinants. We solved a problem of a long list of potential explanatory variables (keywords) by employing the Bayesian Model Averaging. This study assumes that households are more sensitive to the macroeconomic shocks (factors) if they search simultaneously for information on Google about these factors or specific related risks. The results emphasize the role behavioural attention during financial turmoil and economic downturn periods, especially in the environment of very low interest rates.

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