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Consumption and the Great Recession

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Listed:
  • Mariacristina De Nardi
  • Eric French
  • David Benson

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

  • Mariacristina De Nardi & Eric French & David Benson, 2011. "Consumption and the Great Recession," NBER Working Papers 17688, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:17688
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    References listed on IDEAS

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    1. Michael D. Hurd & Susann Rohwedder, 2010. "Effects of the Financial Crisis and Great Recession on American Households," NBER Working Papers 16407, National Bureau of Economic Research, Inc.
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    More about this item

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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