Author: Jacob D. Orchard
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Chapter one examines the cyclical behavior of low-income versus high-income household price indices and documents two new facts: (1) during recessions prices rise more for products purchased relatively more by low-income households (necessities); (2) the aggregate share of spending devoted to necessities is counter-cyclical. I present a mechanism where adverse macroeconomic shocks cause households to shift expenditure away from luxuries toward necessities, which leads to higher relative prices for necessities. I embed this mechanism into a quantitative model which explains over half of the cyclical variation in necessity prices and shares. The results suggest that low-income households are hit twice by recessions: once by the recession itself and again as their price index increases relative to other households. Chapter two presents evidence that the high estimated MPCs from the leading household studies result in implausible macroeconomic counterfactuals. Using the 2008 tax rebate as a case study, we calibrate a standard medium-scale New Keynesian model with the estimated micro MPCs to construct counterfactual macroeconomic consumption paths in the absence of a rebate. The counterfactual paths imply that consumption expenditures would have plummeted in spring and summer 2008 and then recovered when Lehman Brothers failed in September 2008. We use narratives and forecasts to argue that these paths are implausible. We go on to show that reasonable modifications of the model result in general equilibrium forces that dampen rather than amplify micro MPCs. We also show that estimators of the average treatment effect yield smaller micro MPC estimates than the standard two-way fixed effects estimators. The combination of smaller micro MPCs and dampening general equilibrium forces implies general equilibrium consumption multipliers that are below 0.2. In chapter three, I construct novel measures of household-level inflation and show that an increase in a household's personal inflation rate leads to a persistent increase in their price index. Households respond to a personal inflation shock by decreasing nominal consumption, which means their real consumption falls more than one-for-one. I also find a statisically robust relationship between inflation dispersion (the variance of household inflation rates) and the level of absolute aggregate inflation.
Author: Matias Felix Barenstein
Publisher:
ISBN:
Category :
Languages : en
Pages : 374
Get Book Here
Book Description
Author: Merike Kuuk
Publisher:
ISBN: 9789949238941
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: Merike Kukk
Publisher:
ISBN: 9789949238934
Category : Consumption (Economics)
Languages : en
Pages : 173
Get Book Here
Book Description
Author: Judith Ay
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 83
Get Book Here
Book Description
Author: Kyoungsoo Yoon
Publisher:
ISBN:
Category :
Languages : en
Pages : 91
Get Book Here
Book Description
Abstract: The two essays in my dissertation clarify the role of household debt and housing wealth in the U.S. economy because the effect of household debt and house prices on economic activity is conflicting based on existing empirical literature. In my first essay, Three Competing Effects of Expansion in Housing Finance on Consumption, I explicitly consider both debt service burden and wealth risk by adjusting income data with debt service and wealth data with its risk. Based on split-sample estimates of various consumption functions with different time horizons together with the data adjustment, I find that expansion in housing finance since the mid 1980s has three competing effects on consumption. First, housing finance expansion decreases the sensitivity of a household's consumption response to short-run and medium-run movements in income via a relaxed credit constraint. Second, an increase in the liquidity of housing wealth leads to a bigger response of consumption to changes in house prices. However, this increased housing wealth effect can be mitigated or magnified from the last competing effect of increased debt service, depending on the directions of movements in house prices and interest rates. Thus, the net effect of expanded housing finance on consumption depends on the relative magnitudes of the three competing effects in the face of movements in income, house prices, and interest rates. The second essay, The Role of Household Debt and Housing Wealth in the Recent Downturn of the U.S. Economy, uses state-level household debt and housing wealth data built from the Consumer Finance Monthly survey together with measures of economic activity at the state level during the business cycle of 2002-2009 in the U.S. to overcome limitations associated with national-level aggregate data. I find that increased household debt combined with large positive and negative fluctuations in housing wealth led to the recent severe downturn of the U.S. economy. While the increased debt service burden itself negatively affects consumption, households' attitudes toward debt surveyed as debt stress also seem to suppress economic activity such as consumption spending and residential investment.
Author: Jose Maria Casado Garcia
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
This thesis analyses in three essays how some household consumption decisions are conditional upon their geographical location and the consumption behaviour of the households around them. I first explore the relevance of the neighbourhood and habit effects on consumption choices under the hypothesis that the level of satisfaction derived from a given bundle of consumption depends, not only on the consumption bundle itself, but also on how it compares to the bundles of consumption of some reference group and to the agents own past bundle of consumption. I derive a Euler equation from a preference specification that allows for non-separabilities across households and non-separabilities over time. Our estimates suggest that a large fraction of the utility derived from consumption is relative, with one-forth of the weight in the consumption of the reference group and almost one- third in the agent's past consumption. The second paper computes the asymmetrical geographical distribution of the partial insurance capacity of households' consumption. Households have mechanisms to smooth changes in consumption when incomes shift as a result of permanent or transitory shocks. Results show how it is the Southern Spanish regions where households with the lowest insurance capacity with respect to permanent shocks are concentrated. Further, the asymmetric geographical distribution of insurance capacity becomes more evident when we distinguish between age or educational attainment. Finally, the third paper analyses the residential and transport energy consumption in relation to the geographical location of households. I find higher energy efficiency for urban households, and a deeper carbon footprint for rural families. Therefore, there is evidence of a causal effect in the sense of whether making a city bigger makes its citizens more energy efficient or whether moving people to bigger cities makes these people more energy efficient and environmental friendly.
Author: Sebastien Betermier
Publisher:
ISBN:
Category :
Languages : en
Pages : 252
Get Book Here
Book Description
This dissertation consists of three essays in which I study the consumption and investment decisions of households in the presence of two major asset classes: housing and human capital. In the first essay, I analyze how the dual consumption-investment nature of housing affects the consumption dynamics of households. A key feature of the housing market is that for most households, the consumption and investment benefits of housing are non-separable. I propose a tractable theoretical framework to understand the impact of this constraint on the consumption allocation of homeowners who would ideally like to own just a fraction of their home. For these homeowners, the relative cost of living in their home is not just the imputed rental cost. It also includes an opportunity cost of having an unbalanced financial portfolio. This cost varies substantially over time, and it is especially high in good times, when available investment opportunities yield high returns and homeowners allocate a high fraction of their wealth to current consumption. As a result, this cost dampens variations in the level of their housing consumption, and it amplifies variations in both their level of non-housing consumption and the composition of their consumption baskets. I then test empirically this theory in the second essay. Using household-level data from the Panel Study of Income Dynamics (PSID), I test the hypothesis that homeowners who face a high opportunity cost choose ceteris paribus a low housing consumption volatility. I also develop a method to identify these constrained homeowners by comparing their characteristics to those of a subset of unconstrained homeowners: the landlords. The results are consistent with the predictions of the model. First, the characteristics of homeowners that determine how constrained they are in the model are strong predictors of those homeowners who choose to be landlords in the data. For example, homeowners with a low level of risk aversion, little value for housing consumption, and a long horizon are relatively more likely to be landlords. Second, I find evidence that the more constrained homeowners adjust their level of housing consumption much less over time. In the third essay, which was developed in collaboration with Thomas Jansson, Christine Parlour, and Johan Walden, we investigate the relationship between workers' labor income and their investment decisions. Using a detailed Swedish data set on employment and portfolio holdings we estimate wage volatility and labor productivity for Swedish industries and, motivated by theory, we show that highly labor productive industries are more likely to pay workers variable wages. We also find that both levels and changes in wage volatility are significant in explaining changes in household investment portfolios. A household going from an industry with low wage volatility to one with high volatility will ceteris paribus decrease its portfolio share of risky assets by 25%, i.e., 7,750 USD. Similarly, a household that switches from a low labor productivity industry to one with high labor productivity decreases its risky asset share by 20%. Our results suggest that human capital risk is an important determinant of household portfolio holdings.
Author: Satyajit Dutt
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Author: Moses Abramovitz
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 440
Get Book Here
Book Description
Nations and Households in Economic Growth.
