Consumption and the Great Recession

32 Pages Posted: 25 Dec 2011

See all articles by Mariacristina De Nardi

Mariacristina De Nardi

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

Eric French

Department 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

Abstract

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 French, Eric and Benson, David, Consumption and the Great Recession (December 2011). NBER Working Paper No. w17688, Available at SSRN: https://ssrn.com/abstract=1976484

Mariacristina De Nardi (Contact Author)

University College London, Economics Dpt. ( email )

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Federal Reserve Bank of Chicago ( email )

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HOME PAGE: http://www.nber.org/~denardim

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

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HOME PAGE: http://www.nber.org/~denardim

Eric French

Department of Economics ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Institute for Fiscal Studies (IFS) ( email )

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London, WC1E 7AE
United Kingdom

David Benson

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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