Depressed Demand

26 Pages Posted: 17 Jul 2019 Last revised: 2 Oct 2020

See all articles by Baptiste Massenot

Baptiste Massenot

University of Toulouse - Toulouse Business School

Giang Nghiem

Leibniz Institute for Financial Research SAFE; Leibniz Universität Hannover

Date Written: February 14, 2020


Using a survey of Dutch households, we find that individuals who have experienced higher national unemployment rates over their lifetime save more and borrow less, after controlling for aggregate shocks, income, wealth, and demographics. These results are consistent with experience-based learning and inconsistent with rational learning. Furthermore, these individuals find it more important to save for retirement and are more worried about losing their job. These observations suggest that periods of high unemployment depress aggregate demand because of persistently more pessimistic beliefs.

JEL Classification: E7

Suggested Citation

Massenot, Baptiste and Nghiem, Giang and Nghiem, Giang, Depressed Demand (February 14, 2020). SAFE Working Paper No. 257, Available at SSRN: or

Baptiste Massenot (Contact Author)

University of Toulouse - Toulouse Business School ( email )

20, bd Lascrosses
BP 7010
Toulouse, 31068

Giang Nghiem

Leibniz Institute for Financial Research SAFE ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323

Leibniz Universität Hannover ( email )

Königsworther Platz 1
Hannover, 30167

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