NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Consumption and the Great Recession

Mariacristina De Nardi, Eric French, David Benson

NBER Working Paper No. 17688
Issued in December 2011
NBER Program(s):   EFG   PE

We document some key facts about aggregate consumption and its subcomponents over time. We then document the behavior of some important determinants of consumption, such as consumers' expectations about their future income, and changes in the consumers' wealth positions. Finally, we use a simple permanent income model to show that the observed drop in consumption during the Great Recession can be explained by the observed drops in wealth and income expectations.

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This paper was revised on February 29, 2012

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Document Object Identifier (DOI): 10.3386/w17688

Published: Mariacristina De Nardi & Eric French & David Benson, 2012. "Consumption and the Great Recession," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 1-16. citation courtesy of

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