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Non-Durable Consumption and Housing Net Worth in the Great Recession: Evidence from Easily Accessible Data
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
2020 (English)In: Journal of Public Economics, ISSN 0047-2727, E-ISSN 1879-2316, Vol. 189, article id 104176Article in journal (Refereed) Published
Abstract [en]

In an influential paper, Mian, Rao, and Sufi (2013) exploit geographic variation to measure the effect of the fall inhousing net worth on household expenditures during the Great Recession. Their widely-cited estimates arebased on proprietary house price and proprietary expenditure data and therefore not easily replicable. We usealternative data on a subset of non-durable goods and on house prices, which are more easily accessible, to replicate their study. When estimating their same specification on our data, we obtain values for the elasticity of expenditures to the housing net worth shock that are virtually indistinguishable from theirs. However, ourrobustness analyses with respect to alternative model specifications yield more nuanced conclusions about theseparate roles of house prices and initial housing exposure/leverage for the drop in expenditures. Moreover,the estimated elasticity is consistent, theoretically and quantitatively, with a simple calibrated model with wealtheffects where leverage and credit constraints play no role.

Place, publisher, year, edition, pages
2020. Vol. 189, article id 104176
Keywords [en]
Consumption, Great Recession, House prices, Household balance sheet, Non-durable expenditures, Replication, Wealth effect
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-191059DOI: 10.1016/j.jpubeco.2020.104176OAI: oai:DiVA.org:su-191059DiVA, id: diva2:1535106
Available from: 2021-03-08 Created: 2021-03-08 Last updated: 2022-02-25Bibliographically approved

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Mitman, Kurt

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