Job Loss, Credit Constraints and Consumption Growth
The Review of Economics and Statistics
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Crossley, T., & Low, H. (2013). Job Loss, Credit Constraints and Consumption Growth. The Review of Economics and Statistics https://doi.org/10.1162/REST_a_00417
We use direct evidence on credit constraints to study their importance for household consumption growth and for welfare. We distentangle the direct eﬀect on consumption growth of a currently binding credit constraint from the indirect eﬀect of a potentially binding credit constraint which generates consumption risk. Our data is focused on job losers. We ﬁnd that less than 5% of job losers experience a binding credit constraint, but for those that do, they experience signiﬁcant welfare losses, and consumption growth is 24% higher than for the rest of the population. However, even among those who are currently unconstrained and who are able to borrow if needed, consumption responds to transitory income.
Job Loss, Credit Constraints, Consumption
However, even among those who are currently unconstrained and who are able to borrow if needed, consumption responds to transitory income.
External DOI: https://doi.org/10.1162/REST_a_00417
This record's URL: https://www.repository.cam.ac.uk/handle/1810/245423