The paper analyses the reaction of consumer expenditure in Italy (measured using daily data on debit card payments at the POS and cash withdrawals from ATMs) to an indicator of economic policy uncertainty, which was built by applying big data techniques to textual data from newspapers and the social network Twitter. The study covers the period between April 2007 and September 2016.
An increase in economic policy uncertainty temporarily reduces debit card payments and raises the ratio of ATM withdrawals to POS payments, signalling an increase in the preference for cash. Consumers' response was higher in the period between April 2007 and December 2013, which was marked by a double recession. The results are not affected by other data on macroeconomic and financial developments.