Time-Varying Background Risk Over the Great Recession
32 Pages Posted: 1 Aug 2019 Last revised: 16 Dec 2019
Date Written: December 16, 2019
Using a large and representative panel survey of U.S. households conducted immediately before and after the Great Recession, we provide new evidence that this pivotal event changed the relationship between different sources of background risk and household stock market participation in non-uniform ways. Participation became more sensitive to earnings risk and risk associated with the solvency of Defined Benefit plan providers in the aftermath of the Great Recession yet less sensitive to household leverage and ownership of private business assets. Older and less educated households on average were less likely to hold stocks in 2009 than in 2007.
Keywords: Household Finance, Background Risk, Great Recession
JEL Classification: D14, D15, G01, G11
Suggested Citation: Suggested Citation