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Shocks, Stocks, and Socks: Smoothing Consumption over a Temporary Income Loss.

Abstract:

We investigate how households in temporarily straitened circumstances due to an unemployment spell cut back on expenditures and how they spend marginal dollars of unemployment insurance (UI) benefit. Our theoretical and empirical analyses emphasize the importance of allowing for the fact that households buy durable as well as non-durable goods. The theoretical analysis shows that in the short run households can cut back significantly on total expenditures without a significant fall in welfare...

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Publisher copy:
10.1162/JEEA.2009.7.6.1169

Authors


Martin Browning More by this author
Thomas F. Crossley More by this author
Journal:
Journal of the European Economic Association
Volume:
7
Issue:
6
Publication date:
2009-12-05
DOI:
URN:
uuid:5b51df21-c0a7-4b23-928c-146657e82f3a
Local pid:
oai:economics.ouls.ox.ac.uk:14607
Language:
English

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