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Home | Events Archive | Macroeconomic Disasters and Forward-Looking Consumers: Historical Evidence and Evidence from the Covid-19 Pandemic

Macroeconomic Disasters and Forward-Looking Consumers: Historical Evidence and Evidence from the Covid-19 Pandemic

  • Location
  • Date and time

    April 15, 2021
    12:00 - 13:00

Abstract: Macroeconomic disasters (wars, pandemics, depressions) are characterized

by drastic shifts and increased volatility of the aggregate consumption to

income ratio. By standard intertemporal budget constraint logic, this ratio is

linked to expectations of future income and consumption growth rates. We

investigate whether these expectations suffice to explain the shifts in the

consumption-income ratio that occur during disaster periods or whether, on the

other hand, consumers become more forward-looking and therefore give more

weight to these expectations during disaster times. Our theoretical framework

implies that the predictive ability of the current consumption-income ratio for

future income and consumption growth rates is higher during disaster episodes.

We check this both for past disasters and the current Covid-19 pandemic through

the estimation of panel data regressions for industrial economies using

historical annual data (1870-2015) and recent quarterly data (1995Q1-2020Q4).

Our estimations confirm that macroeconomic disasters, contrary to ordinary

recessions, make consumers more forward-looking.

The online brownbag seminar will be chaired by Dirk Schindler.

In order to make this online seminar run as smooth as possible, we would like to inform you how we would like to organize questions/discussion.

If you have a question for the presenter during the seminar, then please make yourself known as follows:

1. Raise your virtual hands (in Zoom) if you want to say something.

2. You can also signal that by raising your real hand.

3. If the presenter and the host don’t see either of those signals, then please send Dirk a chat message.

4. If none of that works, then you should feel free to intervene.

Some information and suggestions:

• Upon joining the meeting, your microphone will be on mute. Please leave it like that and unmute it only if you want to ask a question.

• We kindly ask you to leave your video on during the seminar.