Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession

Christelis, D. , Georgarakos, D. and Jappelli, T. (2015) Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession. Journal of Monetary Economics, 72, pp. 21-41. (doi:10.1016/j.jmoneco.2015.01.003)

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Abstract

Data from the 2009 Internet Survey of the Health and Retirement Study show that many US households experienced large capital losses in housing and financial wealth, and that 5% of respondents lost their job during the Great Recession. For every loss of 10% in housing and financial wealth, the estimated drop in household expenditure was about 0.56% and 0.9%, respectively. Those who became unemployed reduced spending by 10%. In line with predictions of standard inter-temporal choice models, households who perceived the stock market shock to be permanent adjusted spending much more than those who perceived the shock to be temporary.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Christelis, Dr Dimitris
Authors: Christelis, D., Georgarakos, D., and Jappelli, T.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Journal of Monetary Economics
Publisher:Elsevier
ISSN:0304-3932
ISSN (Online):1873-1295
Published Online:02 February 2015

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