Abstract:We evaluate the impact of increased income uncertainty and financial liberalisation in the US on consumption volatility and household welfare. We estimate Euler equations and measure the volatility of unpredictable changes in consumption as the squared residuals. We directly control for liquidity constraints using Survey of Consumer Finances data on access to credit, and document that despite the increase in household debt between 1983 and 2007, there was no decline in the proportion of liquidity constrained h… Show more
“…Minimal savings and lack of access to credit likely leave low‐income families with limited avenues for consumption smoothing (Dynarski & Gruber, ; Lovenheim, ; Lovenheim et al, ). To the best our knowledge, none of the studies have examined whether spending on children is affected by economic instability, but there is evidence that consumption variability increased in the late 20th century although not by as much as income volatility (Dogra & Gorbachev, ; Gorbachev, ). … the permanent income hypothesis rests on assumptions that do not hold for many low‐ and moderate‐income families with credit constraints ……”
Section: How Economic Instability Matters To Child Developmentmentioning
Economic instability has increased in recent decades and is higher for families with low incomes and Black families. Such instability is thought to be driven primarily by precarious work and unstable family structure. In addition, the social safety net has become less of a stabilizing force for low‐income families, in part because benefits are often tied to employment and earnings. Too much change in economic circumstances may disrupt investments in children, parenting practices, and family routines—particularly if the economic changes are unpredictable, undesired, or not part of upward mobility. Given the considerable evidence that economic circumstances affect child health and development, economic stability can and should be an important goal of multiple policy domains. In this report, we describe economic instability, review the pertinent theories for considering how economic instability might matter to children, and describe ideas for policies that could reduce or moderate instability. We include policies that reduce instability in earnings, use public assistance to stabilize income or reduce material hardship, or enhance parents' capacity to deal with or avoid instability.
“…Minimal savings and lack of access to credit likely leave low‐income families with limited avenues for consumption smoothing (Dynarski & Gruber, ; Lovenheim, ; Lovenheim et al, ). To the best our knowledge, none of the studies have examined whether spending on children is affected by economic instability, but there is evidence that consumption variability increased in the late 20th century although not by as much as income volatility (Dogra & Gorbachev, ; Gorbachev, ). … the permanent income hypothesis rests on assumptions that do not hold for many low‐ and moderate‐income families with credit constraints ……”
Section: How Economic Instability Matters To Child Developmentmentioning
Economic instability has increased in recent decades and is higher for families with low incomes and Black families. Such instability is thought to be driven primarily by precarious work and unstable family structure. In addition, the social safety net has become less of a stabilizing force for low‐income families, in part because benefits are often tied to employment and earnings. Too much change in economic circumstances may disrupt investments in children, parenting practices, and family routines—particularly if the economic changes are unpredictable, undesired, or not part of upward mobility. Given the considerable evidence that economic circumstances affect child health and development, economic stability can and should be an important goal of multiple policy domains. In this report, we describe economic instability, review the pertinent theories for considering how economic instability might matter to children, and describe ideas for policies that could reduce or moderate instability. We include policies that reduce instability in earnings, use public assistance to stabilize income or reduce material hardship, or enhance parents' capacity to deal with or avoid instability.
“…We provide 1 The following papers use the food consumption measure: Morgan (1971), Hall and Mishkin (1982), Altonji and Siow (1987), Zeldes (1989), Dynan (2000), Carroll (1994), Lusardi (1996), Jappelli, Pischke, and Souleles (1998), Ziliak (1998), Stephans (2001), Gourinchas and Parker (2002), Hurst and Stafford (2004), Filer and Fisher (2007), and Gorbachev (2011). Fisher and Johnson (2006), Blundell, Pistaferri, andPreston (2008), Heathcote, Perri, andViolante (2010), Dynan (2012), Attanasio and Pistaferri (2014), Kaplan, Violante, and Weidner (2014), Dogra and Gorbachev (2015), Krueger, Mitman, and Perri (2016), Choi, McGrarry, and Schoeni (2015) and Fisher et al (2016a) use a broader measure of consumption.…”
Recent studies of economic inequality almost always separately examine income, consumption, and wealth inequality and, hence, miss the important synergy among the three measures explicit in the life-cycle budget constraint. Using Panel Study of Income Dynamics data from 1999 through 2013, we examine whether these changes are more dramatic at higher or lower levels of wealth and find that the marginal propensity to consume is lower at higher wealth quintiles. This suggests that low-wealth households cannot smooth consumption as much as other households do, which further implies that increasing wealth inequality likely reduces aggregate consumption and limits economic growth.
“…If the money liquidity is at a moderate level, people increase savings due to the substitution effect of savings. Therefore, IRU mainly had negative impacts after 2012 [ 95 , 96 ].…”
Section: Resultsmentioning
confidence: 99%
“…IRU has positive impacts on FCP during periods of high currency liquidity (for example, April 2007 to February 2008 and May 2009 to March 2010). During periods of moderate currency liquidity, IRU has negative impacts on FCP by reducing food consumption, due to the substitution effect of savings, but these negative impacts are small [ 95 , 96 ]. FU has greater impacts on FCP in the time of high currency liquidity [ 99 , 100 ].…”
The food supply chain operates in a complex and dynamic external environment, and the external uncertainties from natural and socio-economic environment pose great challenges to the development of the food industry. In particular, the COVID-19 pandemic and Russia–Ukraine conflict have further exacerbated the vulnerability of the global food supply chain. Analyzing the dynamic impacts of external uncertainties on the stability of food supply chain is central to guaranteeing the sustainable security of food supply. Based on the division of food supply chain and the classification of external uncertainties, the TVP-FAVAR-SV model was constructed to explore the dynamic impacts of external uncertainties on food supply chain. It was found that the impacts of external uncertainty elements were significantly different, the combination of different external uncertainty elements aggravated or reduced the risks of food supply chain. And some uncertainty elements had both positive and negative impacts in the whole sample period, as the magnitude and direction of the impacts of various uncertainties in different periods had time-varying characteristics.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
