The Rise and Fall of Consumption in the '00s

U.S. consumption has gone through steep ups and downs since 2000, but the causes of these fluctuations are still imperfectly identified. We quantify the relative statistical impact of income, unemployment, house prices, credit scores, debt, expectations, foreclosures, inequality, and refinancings on consumption growth for four subperiods: the "dot-com recession" (2001-2003), the "subprime boom" (2004-2006), the Great Recession (2007-2009), and the "tepid recovery" (2010-2012). We document that the explanatory power of different factors varies by subperiods, implying that a successful modeling of this entire decade needs to allow for multiple determinants of consumption. Unemployment, income, and debt are important determinants of consumption during all four periods

The impact of learning disabilities on children and parental outcomes: Evidence from the Panel Study of Income Dynamics

We document the characteristics of children and young adults identified in the Panel Study of Income Dynamics as having a learning disability and study whether legislative changes in diagnosis criteria have had a noticeable effect determining who receives a diagnosis. We further document that children and young adults identified as a having a learning disability experience less desirable outcomes early in life, including trouble with the police, drug use, violent behavior, incarceration, self-reported low levels of well-being, lower educational attainment, and less favorable labor market outcomes. We also find that the mothers of children diagnosed with learning disabilities are less likely than other mothers to participate in the labor market

The mortgage cash flow channel of monetary policy transmission: A tale of two countries

We study the mortgage cash flow channel of monetary policy transmission under fixed-rate mortgage (FRM) versus adjustable-rate mortgage (ARM) regimes by comparing the United States with primarily long-term FRMs and Spain with primarily ARMs that automatically reset annually. We find a robust transmission of mortgage rate changes to spending in both countries but surprisingly a larger effect in the United States-and provide two explanations for this finding. First, there are channels of transmission other than the mortgage cash flow effect since other interest rates co-move with the mortgage rate. Second, while mortgage resets in Spain are automatic and typically small, mortgagors in the United States must actively refinance to lock in lower rates. As a result, the mortgage cash flow effect in Spain is homogeneous across mortgagors and symmetric for rate increases and decreases, whereas in the United States the effect is largest when rates decline, especially for households identified as likely refinancers

Consumption, credit, and the missing young

There are more young adults today with either no credit history or insufficient credit history to be scored by one of the major credit bureaus than there were before the Great Recession−a reality that is likely an unintended outcome of the CARD Act of 2009. In regressions that include a rich set of controls, this paper shows that measures of young adults missing from credit bureau data act as a drag on state-level consumption growth. This finding seems to be driven by young individuals from more disadvantaged backgrounds having less access to credit since the act went into effect

The tail that wagged the dog: What explains the persistent employment effect of the 10-day PPP funding delay?

This study explores the mechanisms explaining the large, persistent effect of the 10-day funding delay in the 2020 Paycheck Protection Program (PPP) on employment recovery during the COVID-19 pandemic, as estimated by Doniger and Kay (2021). We find that the top 1 percent of urban counties by population fully account for the significant effect of the delay on county-level employment. The strong correlation between worse loan delay and slower employment growth in these counties is due to a factor commonly omitted from analyses: The nature of business and the high rate of human interactions in major urban centers render these areas exceptionally and persistently vulnerable to infectious diseases. Moreover, we find that receiving more PPP funding and more transfers from other pandemic-related assistance programs contributed significantly more to local economic recovery compared with receiving PPP funds earlier

A concise test of rational consumer search

A simple model of time allocation between work and price-search predicts that consumers spend relatively more time searching for better prices for goods of which they consume relatively more. Using scanner data, we confirm empirically that consumers pay lower (higher) prices for goods that they buy more (less) of than other consumers. Our results are conservative, because we compare goods that are defined as narrowly as possible by UPC codes, and provide a lower bound for the savings obtained from bargain hunting

The local aggregate effects of minimum wage increases

This paper examines the effect of minimum wage changes on local aggregate inflation and consumption growth. The paper utilizes variation in state-level minimum wages across locations and finds that minimum wage increases have a relatively modest effect on both city-level inflation and spending growth over the years following the change. The most noticeable effects are for food consumed at home and away from home - industries that typically employ a large share of low-wage and minimum-wage workers. Interestingly, consumers adjust their real food consumption when minimum wages rise, suggesting that some workers benefit from minimum wage changes

Comparative Service Consumption in six Countries

DEMPATEM project reportThe study presents cross-country comparativr workon shifts in houdsehold expenditure patterns during the 1980s and 1990s in France Germany, the netherlands, Spain, the United Kingdom and the United States