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Journal Article
The weakened influence of low interest rates on durable goods spending
Despite record-low interest rates, the pace of the current economic recovery has been only moderate. One reason is that the positive impact of lowered interest rates on consumer purchases of durable goods has diminished
Working Paper
Changing Income Risk across the US Skill Distribution: Evidence from a Generalized Kalman Filter
For whom has earnings risk changed, and why? To answer these questions, we develop a filtering method that estimates parameters of an income process and recovers persistent and temporary earnings for every individual at every point in time. Our estimation flexibly allows for first and second moments of shocks to depend upon observables as well as spells of zero earnings (i.e., unemployment) and easily integrates into theoretical models. We apply our filter to a unique linkage of 23.5m SSA-CPS records. We first demonstrate that our earnings-based filter successfully captures observable shocks ...
Working Paper
Revisiting the use of initial jobless claims as a labor market indicator
Initial jobless claims provide a weekly snapshot of the labor market. While known for being volatile, when put into the appropriate context initial claims can provide valuable information on the upcoming employment report. This paper introduces a new labor market indicator, referred to as the threshold of initial jobless claims, that serves as a benchmark of comparison for the weekly reporting of initial jobless claims. The threshold incorporates multiple margins of the labor market such as hires, quits, layoffs, and labor force participation. Deviations of observed initial claims from the ...
Journal Article
Has durable goods spending become less sensitive to interest rates?
Despite record-low interest rates, the pace of the current economic recovery has been only moderate. One reason is that the positive impact of lowered interest rates on consumer purchases of durable goods has diminished. Comparing the current economic recovery with those that followed the recessions of 1981-82, 1990-91 and 2001, Van Zandweghe and Braxton explore the way movements in key interest rates have affected consumer spending on durable goods. They find that if the boost from lowered interest rates to durable goods spending in the current recovery had stayed as strong as it was on ...
Journal Article
Consumer debt dynamics : an update
Working Paper
Consumer Debt Dynamics: Follow the Increasers
Consumer debt played a central role in creating the U.S. housing bubble, the ensuing housing downturn, and the Great Recession, and it has been blamed as a factor in the weak subsequent recovery as well. This paper uses micro-level data to decompose consumer debt dynamics by separating the actions of consumer debt increasers and decreasers, and then further decomposing movements into percentage and size margins among the increasers and decreasers. We view such a decomposition as informative for macroeconomic models featuring a central role for consumer debt. Using this framework, we show that ...
Journal Article
What drives consumer debt dynamics?
Consumers generally have been reducing their debt levels in the wake of the housing bust, and many policymakers and economists have pointed to this deleveraging as an important drag on the recovery from the recession. ; A key driving factor has been the sharp decline in the number of consumers taking on additional debt. With fewer borrowers taking advantage of low interest rates to take on debt and expand spending, accommodative monetary policy is less effective than in normal times. ; But Knotek and Braxton find that a modest rebound is now under way in the number of consumers increasing ...
Working Paper
Consumer debt dynamics:follow the increasers
Consumer debt played a central role in creating the U.S. housing bubble, the ensuing housing downturn, and the Great Recession, and it has been blamed as a factor in the weak subsequent recovery as well. This paper uses micro-level data to decompose consumer debt dynamics by separating the actions of consumer debt increasers and decreasers, and then further decomposing movements into percentage and size margins among the increasers and decreasers. We view such a decomposition as informative for macroeconomic models featuring a central role for consumer debt. Using this framework, we show that ...