LEADS on Macroeconomic Risks to and from the Household Sector
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Chapter in forthcoming NBER book Risk Topography: Systemic Risk and Macro Modeling, Markus K. Brunnermeier and Arvind Krishnamurthy, editors
This chapter describes a system, called the LEADS system, for providing market participants, regulators, and households with information on the reallocation of resources within, from, and to the household sector in response to macroeconomic events. The household sector is both a propagator of shocks to the economy, as wealth is redistributed across households with differing propensities to consume, and an originator of risky claims held in systemically important places, as losses are shifted from households to creditors such as financial institutions. Information about these exposures, like information generally, is conveyed by prices and so is under-produced by markets. The LEADS system – collection, analysis, and distribution of information on household exposures to macroeconomic risk factors – can potentially lead to better macroeconomic performance through better informed public policy and private decision making.
This paper was revised on May 23, 2013LEADS on Macroeconomic Risks to and from the Household Sector, Jonathan A. Parker
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