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Working Paper
Income Shocks and Their Transmission into Consumption
This paper reviews the economics literature of, primarily, the past 20 years that studies the link between income shocks and consumption fluctuations at the household level. We identify three broad approaches through which researchers estimate the consumption response to income shocks: (1) structural methods in which a fully or partially specified model helps identify the consumption response to income shocks from the data, (2) natural experiments in which the consumption response of one group that receives an income shock is compared with another group that does not, and (3) elicitation ...
Discussion Paper
Debt Payments and Spending: Evidence from the 2023 Student Loan Payment Restart
In October 2023, roughly 40 million Americans faced a new monthly bill as federal student loan payments resumed after a three-year pandemic-induced pause. The restart of loan payments effectively reduced disposable income for borrowers, raising a critical question: How do debt payments affect household spending?