Consumption and the Great Recession

32 Pages Posted: 25 Dec 2011 Last revised: 31 Oct 2022

See all articles by Mariacristina De Nardi

Mariacristina De Nardi

Federal Reserve Bank of Chicago; University College London, Economics Dpt.; National Bureau of Economic Research (NBER) - Public Economics

Eric French

Faculty of Economics; Institute for Fiscal Studies (IFS)

David Benson

Board of Governors of the Federal Reserve System

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Date Written: December 2011


We document some key facts about aggregate consumption and its subcomponents over time. We then document the behavior of some important determinants of consumption, such as consumers' expectations about their future income, and changes in the consumers' wealth positions. Finally, we use a simple permanent income model to show that the observed drop in consumption during the Great Recession can be explained by the observed drops in wealth and income expectations.

Suggested Citation

De Nardi, Mariacristina and De Nardi, Mariacristina and French, Eric and Benson, David, Consumption and the Great Recession (December 2011). NBER Working Paper No. w17688, Available at SSRN:

Mariacristina De Nardi (Contact Author)

Federal Reserve Bank of Chicago ( email )

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University College London, Economics Dpt. ( email )

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National Bureau of Economic Research (NBER) - Public Economics ( email )

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Eric French

Faculty of Economics ( email )

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Institute for Fiscal Studies (IFS) ( email )

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David Benson

Board of Governors of the Federal Reserve System ( email )

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Washington, DC 20551
United States

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