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Financial crisis and persistence: evidence from sticky expectations consumption growth model

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  • Saten Kumar
  • Pengfei Jia

Abstract

We estimate the degree of stickiness in aggregate consumption growth for the U.S. considering the effects of the Great Recession. The behavior of stickiness estimate in the crisis is somewhat as the U-shaped pattern. Our findings imply that during the crisis consumers’ attentiveness to aggregate information has slightly increased, thereby reducing the persistence of aggregate consumption growth. However, the reduction in persistence is transitory. Since 1980, the U.S. faced five recessions and in most of them the degree of stickiness declined, albeit temporarily.

Suggested Citation

  • Saten Kumar & Pengfei Jia, 2019. "Financial crisis and persistence: evidence from sticky expectations consumption growth model," Applied Economics, Taylor & Francis Journals, vol. 51(17), pages 1799-1807, April.
    • Handle: RePEc:taf:applec:v:51:y:2019:i:17:p:1799-1807
    DOI: 10.1080/00036846.2018.1529394
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    Cited by:

    1. J r my Boccanfuso, 2022. "Consumption Response Heterogeneity and Dynamics with an Inattention Region," Working Papers wp1172, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Filiz Mızrak & Serhat Yüksel, 2019. "Significant Determiners of Greek Debt Crisis: A Comparative Analysis with Probit and MARS Approaches," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 8(3), pages 33-50, July.

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