Download or read book Consumption Smoothing During the Financial Crisis written by Michael D. Hurd and published by . This book was released on 2017 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Because of data limitations, the quantification of consumption smoothing in response to economic shocks has been challenging to investigate empirically. We used monthly data on total household spending, income, and labor force participation to estimate the effects of unemployment on household spending. The data come from the RAND American Life Panel, a standing survey sample that is representative of the United States adult population. We compare monthly spending and income of households prior to unemployment with spending and income following unemployment for up to 40 months. We compare spending and income following re-employment with spending and income while unemployed. We find that by month two of unemployment total household spending per month declined to about 83 percent of pre-unemployment spending. At about 14 months of unemployment, spending began to decline further, reaching 70 percent of pre-unemployment spending by month 30. Income declined much more sharply to 37 percent of its pre-unemployment level by month two of unemployment, with little change after that as the duration of unemployment increased. Thus, consumption does not decline as much as income, so that it is somewhat smoothed relative to income; yet, particularly over long-duration unemployment the decline is substantial.On re-employment, income increased rapidly, spending much less rapidly. As of the third month, high-frequency spending was about 9 percent above its value in the last month of unemployment. It continued to increase until it was about 20 percent higher. Just as with an income drop, spending is somewhat smoothed when income increases.

Download or read book Business Cycles Economic Crises and the Poor written by Pierre-Richard Agénor and published by World Bank Publications. This book was released on 2001 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Shocks Stocks and Socks written by Martin Browning and published by . This book was released on 1999 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Coping with Economic Shocks written by and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Private Consumption Smoothing Mechanisms written by Kyle Frederic Herkenhoff and published by . This book was released on 2014 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies the interaction between private consumption smoothing mechanisms and labor markets. Chapter 1 studies the growth in credit card access among the unemployed over the last 40 years and how this credit growth has impacted labor markets. I begin by developing a general equilibrium business cycle model with search in both the labor market and in the credit market. Calibrating to the observed path of credit between 1974 and 2012, I find that growth in credit card access can lead to deeper and longer recessions as well as moderately slower recoveries. Chapter 2, which is co-authored with Lee E. Ohanian, looks at the impact of foreclosure protection on unemployment during the 2007-2009 financial crisis. Through a purely positive lens, we study and document the growing trend of mortgagors who skip mortgage payments as an extra source of ``informal'' unemployment insurance during the 2007 recession and the subsequent recovery. In a dynamic model, we capture this behavior by treating both delinquency and foreclosure not as one period events, but rather as protracted and potentially reversible episodes that influence job search behavior and wage acceptance decisions. After calibrating, we find that the observed foreclosure delays increase the unemployment rate by an additional 1/3%-3/4%. And finally, Chapter 3, which is co-authored with Lee E. Ohanian, Kris Gerardi, and Paul Willen, looks at the empirical determinants of default and provides a new suggestive measure of strategic default. In sharp contrast to prior studies that proxy for individual unemployment status using regional unemployment rates, we find that individual unemployment is the strongest predictor of default. We also find that only 13.9% of defaulters have both negative equity and enough liquid or illiquid assets to make 1 month's mortgage payment. This suggests that ``ruthless, '' or ``strategic'' default during the 2007-2009 recession is relatively rare, and suggests that policies designed to promote employment, such as payroll tax cuts, are most likely to stem defaults in the long run rather than policies that temporarily modify mortgages.

Download or read book Financial Crises Explanations Types and Implications written by Mr.Stijn Claessens and published by International Monetary Fund. This book was released on 2013-01-30 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.

Download or read book Household Leverage and the Recession written by Callum Jones and published by International Monetary Fund. This book was released on 2018-08-30 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We evaluate and partially challenge the ‘household leverage’ view of the Great Recession. In the data, employment and consumption declined more in states where household debt declined more. We study a model where liquidity constraints amplify the response of consumption and employment to changes in debt. We estimate the model with Bayesian methods combining state and aggregate data. Changes in household credit limits explain 40 percent of the differential rise and fall of employment across states, but a small fraction of the aggregate employment decline in 2008-2010. Nevertheless, since household deleveraging was gradual, credit shocks greatly slowed the recovery.

Download or read book Lifecycle Impacts of the Financial and Economic Crisis on Household Optimal Consumption Portfolio Choice and Labor Supply written by Jingjing Chai and published by . This book was released on 2011 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: The direct financial impact of the financial crisis has been to deal a heavy blow to investment-based pensions; many workers lost a substantial portion of their retirement saving. The financial sector implosion produced an economic crisis for the rest of the economy via high unemployment and reduced labor earnings, which reduced household contributions to Social Security and some private pensions. Our research asks which types of individuals were most affected by these dual financial and economic shocks, and it also explores how people may react by changing their consumption, saving and investment, work and retirement, and annuitization decisions. We do so with a realistically calibrated lifecycle framework allowing for time-varying investment opportunities and countercyclical risky labor income dynamics. We show that households near retirement will reduce both short- and long-term consumption, boost work effort, and defer retirement. Younger cohorts will initially reduce their work hours, consumption, saving, and equity exposure; later in life, they will work more, retire later, consume less, invest more in stocks, save more, and reduce their demand for private annuities.

Download or read book Crisis and Consumption Smoothing written by Pushan Dutt and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The dramatic impact of the current crisis on performance of businesses across sectors and economies have been headlining the business press for the past many months. Interestingly, the impact of the crisis across categories of goods/services and across economies reveals several interesting patterns. Extant reconciliations of these patterns in the popular press rely on ad-hoc reasoning. Using historical data on currency crisis episodes across the world, this paper shows that the observed patterns in the impact of a crisis across classes of goods and economies are a consequence of active smoothing of consumption expenditures by consumers. The results reveal that consumer behavior in a crisis is characterized by consumption smoothing at various levels - inter-temporal, inter-category and intra-category. In sum, these behavioral adjustments result in significant reallocation of consumption expenditures. More importantly, the smoothing decisions due to a crisis are distinct and independent of the impact of changes in income and prices that accompany a crisis. Interestingly, there is marked variation in the patterns of consumption smoothing across different types of economies. Taken together, these results have important and interesting implications for managers, policy makers and academics.

Download or read book Consumption Smoothing Among Working class American Families Before Social Insurance written by John A. James and published by . This book was released on 1999 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Handbook of US Consumer Economics written by Andrew Haughwout and published by Academic Press. This book was released on 2019-08-12 with total page 456 pages. Available in PDF, EPUB and Kindle. Book excerpt: Handbook of U.S. Consumer Economics presents a deep understanding on key, current topics and a primer on the landscape of contemporary research on the U.S. consumer. This volume reveals new insights into household decision-making on consumption and saving, borrowing and investing, portfolio allocation, demand of professional advice, and retirement choices. Nearly 70% of U.S. gross domestic product is devoted to consumption, making an understanding of the consumer a first order issue in macroeconomics. After all, understanding how households played an important role in the boom and bust cycle that led to the financial crisis and recent great recession is a key metric. Introduces household finance by examining consumption and borrowing choices Tackles macro-problems by observing new, original micro-data Looks into the future of consumer spending by using data, not questionnaires

Download or read book The Financial Crisis Inquiry Report written by Financial Crisis Inquiry Commission and published by Cosimo, Inc.. This book was released on 2011-05-01 with total page 692 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Financial Crisis Inquiry Report, published by the U.S. Government and the Financial Crisis Inquiry Commission in early 2011, is the official government report on the United States financial collapse and the review of major financial institutions that bankrupted and failed, or would have without help from the government. The commission and the report were implemented after Congress passed an act in 2009 to review and prevent fraudulent activity. The report details, among other things, the periods before, during, and after the crisis, what led up to it, and analyses of subprime mortgage lending, credit expansion and banking policies, the collapse of companies like Fannie Mae and Freddie Mac, and the federal bailouts of Lehman and AIG. It also discusses the aftermath of the fallout and our current state. This report should be of interest to anyone concerned about the financial situation in the U.S. and around the world.THE FINANCIAL CRISIS INQUIRY COMMISSION is an independent, bi-partisan, government-appointed panel of 10 people that was created to "examine the causes, domestic and global, of the current financial and economic crisis in the United States." It was established as part of the Fraud Enforcement and Recovery Act of 2009. The commission consisted of private citizens with expertise in economics and finance, banking, housing, market regulation, and consumer protection. They examined and reported on "the collapse of major financial institutions that failed or would have failed if not for exceptional assistance from the government."News Dissector DANNY SCHECHTER is a journalist, blogger and filmmaker. He has been reporting on economic crises since the 1980's when he was with ABC News. His film In Debt We Trust warned of the economic meltdown in 2006. He has since written three books on the subject including Plunder: Investigating Our Economic Calamity (Cosimo Books, 2008), and The Crime Of Our Time: Why Wall Street Is Not Too Big to Jail (Disinfo Books, 2011), a companion to his latest film Plunder The Crime Of Our Time. He can be reached online at www.newsdissector.com.

Download or read book Financial Disruptions and the Cyclical Upgrading of Labor written by Brendan Epstein and published by International Monetary Fund. This book was released on 2017-06-15 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Amid total factor productivity (TFP) shocks job-to-job flows amplify the volatility of unemployment, but the aggregate implications of job-to-job flows amid financial shocks are less understood. To develop such understanding we model a general equilibrium labor-search framework that incorporates on-the-job (OTJ) search and distinctly accounts for the differential impact of TFP and financial shocks. Surprisingly, we find that the interaction of OTJ search with financial shocks is sufficiently different from its interaction with TFP shocks so that, under standard calibrations, our model generates aggregate dynamics exceedingly in line with the behavior of key U.S. macro data across several decades and in the wake of the Global Financial Crisis as well. Importantly, as in the data, the model yields relatively high volatilities of consumption, labor income, and unemployment. As such, our work contributes to resolving two limitations of current general equilibrium labor-search theory: under standard calibrations models without OTJ search generate implausibly low unemployment volatility, while models with OTJ search generate unemployment volatility closer to the data but at the expense of implausibly low consumption and labor-income volatility.

Download or read book Banking Crises Liquidity and Credit Lines written by Gurbachan Singh and published by Routledge. This book was released on 2012-06-14 with total page 274 pages. Available in PDF, EPUB and Kindle. Book excerpt: The banking crises in 2007-10 are not exceptional. There have been many such crises in the past in both developed countries and emerging economies. A banking crisis can be related to solvency or liquidity (or both). This book focuses on banking crisis and liquidity. This book starts from basics and gradually builds up with very few technicalities. Though the analysis is primarily theoretical, we provide a historical background, a macroeconomic perspective, and policy implications for both closed and open economies.

Download or read book Consumption Smoothing Inequality and Poverty in Thailand written by Sunida Susantud and published by . This book was released on 2013 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt: This work examines 1) the extent to which consumption of Thai households responded to the 2008 Thailand economic crisis; 2) identifies the crucial socioeconomic characteristics that mainly affect income growth and changes in income distribution in Thailand during 2002 to 2009; and 3) examines poverty dynamics and vulnerability to poverty during 2002-2009.--Abstract

Download or read book Consumption Smoothing and the Current Account written by Ross Milbourne and published by . This book was released on 1990 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Empirical Analysis of Household Consumption Behavior written by Youn Seol and published by . This book was released on 2008 with total page 152 pages. Available in PDF, EPUB and Kindle. Book excerpt: The dissertation is an empirical analysis of consumer behavior using household-level data. The dissertation consists of two essays. The first essay conducts split sample test on whether household consumption responds to anticipated changes in income. The second essay explores heterogeneity in a dynamic panel setting. The first essay is "The Excess Sensitivity in Consumption without Liquidity Constraint: Evidence from Monthly Household Data". The monthly salaries and allowances of Korean government employees are known in advance but vary greatly throughout the year. Using a large Korean monthly panel data set from 1994 to 2003, we examine how nondurable consumption expenditure in households headed by government employees responds to predictable income changes. We find excess sensitivity in consumption during the pre-Asian financial crisis era in households headed by young government employees with low liquid assets or low income. These household features are commonly associated with liquidity constraints. Further analysis shows that despite the apparent association, liquidity constraint is not the most convincing explanation for the excess sensitivity. Instead, the empirical finding is consistent with the theory that certain households deviate from consumption smoothing when the effort involved exceeds the welfare gained. The second essay is "A Dynamic Panel Analysis on the Heterogeneity in Excess Sensitivity Household Consumption." The existing empirical models of household consumption assume parameters are constant across households, implying homogenous responses by households to changes in environment. Using a large Korean monthly panel data set, we explore heterogeneity in response of household consumption expenditure to predictable income changes. We find excess sensitivity in about 4% of the households in the sample. The connection between household characteristics and estimated household excess sensitivity sheds new light in the cause of excess sensitivity: excess sensitivity is likely due to low cost of failure in consumption smoothing rather than liquidity constraint. We also find that these small number of households are the main cause for excess sensitivity found in the pooled regression and time series regression of aggregated data. We conduct finite sample inference on household heterogeneity in a Bayesian framework.