Browsing by Subject "Recession"

Now showing 1 - 6 of 6
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    Essays in uninsurable income risk and household behavior.
    (2011-06) Narita, Machiko
    This dissertation consists of two essays. The first essay examines a key driving force of the recent decline in the U.S. homeownership rate by investigating the effect of each factor on the housing and mortgage decisions. The second paper assesses how efficiently households in the U.S. economy insure their cohort-specific income risk. Although the applications differ, they have a unifying theme: macroeconomic implications of households' behavior in the presence of uninsurable income risk. Both essays address this theme using household-level data and quantitative macroeconomic models. In the first essay, I ask if a mortgage credit crunch caused the recent decline in the homeownership rate in the U.S. To answer this question, I develop a life-cycle model that accommodates the expansion of alternative mortgages that featured delayed amortization. I use the model to measure the distributional consequences of two factors: (1) the fade-out of alternative mortgages and (2) declines in labor earnings. I find that the declining labor income is the main driving force behind the cross-sectional feature of the housing bust: the proportionally larger decrease in homeownership among non-college educated households. The fade-out of alternative mortgages, however, predicts the opposite. This is because college educated households, who have high future earnings, are more likely to utilize alternative mortgages when those mortgages are available. In the second essay, we propose an observation-based approach to measuring what percentage of household's income risk is insured and how much welfare cost is generated by the departure from full-insurance. Using a synthetic panel data set from the Consumer Expenditure Survey (CEX) for the period of 1980-2009, we investigate how efficiently U.S. households insure cohort-specific income risk. There are two main findings. First, on average, U.S. households insured 64% of their cohort-level income risk, and the welfare cost of uninsured risk was 1% of their annual expenditure on nondurables and services. Second, households who faced a higher risk tended to insure a larger portion of their risk. This observation implies either or both of the following: (1) they made more effort to hedge their risk (Kocherlakota (1996) and Krueger and Perri (2006)), or (2) the dispersion in income risk mostly came from transitory shocks.
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    Essays on macroeconomics
    (2013-07) Guo, Si
    The dissertation includes two essays. In the first essay I try to explain the slow recovery of the U.S. economy after the 2008-2009 recession. I develop a theory in which the slow recovery is due to continuing weak consumption demand arising from slowly resolved aggregate uncertainty. An exogenous belief shock creates uncertainty about firms' credit availability. This translates into income uncertainty at the household level because firms have to borrow from banks in order to hire workers. In response, household demand is low, which in turn causes firms to borrow little and produce little. This low level of economic activity impedes the resolution of uncertainty regarding credit availability. Therefore, the economy stagnates with high uncertainty, low demand, and low output, even though there is no shock to fundamentals. The resolution of uncertainty is not efficient because households do not fully internalize the effect of increasing their own demand on improving the quality of information. This leaves room for government intervention. Quantitatively my model generates a slow recovery, which is comparable to U.S. employment data. Model pre- dictions are also consistent with U.S. county level data: counties with cheaper access to household credit have higher employment but all counties recover at the same rate. In the second essay, which is co-authored with Yun Pei, we try to understand the impact of sovereign default on the lending countries. We develop a model in which banks in the lending countries can buy foreign sovereign bond, provide loan to domestic firms and borrow from domestic households. We find that a sovereign default in foreign countries can result in an output drop in the lending countries, because the default can worsen the balance sheet of banks. Therefore default risk in foreign countries can be transmitted to output risk in the lending countries. However, this does not mean that the governments in the lending countries should limit the purchase of foreign sovereign bond. A tax on the purchase of sovereign bond reduces the output fluctuation but also decreases the welfare of domestic bankers and households.
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    Government Spending and Economic Recovery: A State Comparison during the Great Recession
    (Hubert H. Humphrey School of Public Affairs, 2014-05-12) Segal, Conrad
    In late 2007, the U.S. entered the worst recession since the Great Depression. State and local governments saw large decreases in their revenues and, due to their constitutions, were forced to balance their budgets, usually by reducing spending. The loss in state and local government spending during the recession was countered by two large federal expenditures totaling over a trillion dollars. Every state had a different amount of per capita government spending during the recession. This paper aims to answer the question: did states that, relative to other states, had high amounts of per capita government spending recover faster economically than states with low amounts of per capita government spending? Using national macro data, much of which comes from the census and the Bureau of Economic Analysis, and OLS models, I conclude that states that had high amounts of government spending, either in their capital or current budgets, recovered 5% faster in both GSP and payroll. The data also suggest that the full effect of the stimulus spending was over by 2011.
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    Race, Ethnicity and Job Loss: An Analysis Before, During, and After the Great Recession of 2007-2009
    (Hubert H. Humphrey School of Public Affairs, 2014-05-15) Dusoruth, Vaneesha
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    Three Essays in Health Economics
    (2015-09) Choi Yoo, Sung
    This dissertation consists of three essays addressing different topics in health economics. The first essay investigates the impact of the great recession on hospital capital investment and how hospitals respond to offset the recession effect. The great recession may have made it difficult for hospitals to borrow thus reducing capital investments. Hospital capital investment was modeled using the Euler equation with a liquidity constraint. I estimate the model with California hospital data and system generalized method of moments. Estimates were decomposed to show the recession effect in terms of investment dollars. Findings suggest that not for profit and public hospitals were liquidity constrained during the recession. Comparing the changes in hospital capital investment between 2006 and 2009 showed that hospitals used cash flow to increase capital investment by $2.5 million other things equal. The second essay investigates the incremental cost effectiveness of a telecare management intervention for managing pain and depression among patients with cancer. Pain and depression are often undetected and undertreated among patients with cancer. Telecare management has been shown to be effective for managing pain and depression among patients with cancer. Outcomes and cost data from the Indiana Cancer Pain and Depression trial was analyzed to the determine the cost effectiveness of the telecare management intervention. The intervention group was associated with more depression-free days and better quality-adjusted life years than the usual care group. The third essay investigates how out-of-pocket health care spending trends changed before and during the recession. The great recession slowed the growth of health care spending and its impact may have been different for adults and children. Reduction in children's health care spending for may hinder children's access to routine care which could have adverse implications in the long run. Out-of-pocket spending trends of privately insured families with children was examined using the Medical Expenditure Panel Survey data from 2001 to 2009. Out-of-pocket spending for most children was not affected by the recession but spending for children with special needs decreased during the recession.
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    Time in the “Great Recession”: the impact of the Great recession and being unemployed on time spent in healthy behaviors and with family members.
    (2012-08) Hill, Rachelle F.
    The "Great Recession" gripped the global economy beginning in December of 2007 and though the National Bureau of Economic Research (2010) determined that it concluded in June of 2009, for many people across the United States it has not yet receded as of July of 2012. In this study, I examine the impacts of both the overall employment insecurity accompanying the Great Recession and actual job loss on daily time use. Specifically, I examine the effects of being unemployed, living in states with poor economic conditions, and being interviewed during the Great Recession on 1) time spent with family members, 2) time spent sleeping, and 3) time spent engaging in healthy behaviors in order to gain a greater understanding of the effects of employment uncertainty on the lives of US Population. Drawing on the American Time Use Survey (ATUS), I use multivariate statistical models to examine differences in time spent sleeping, in healthy behaviors, and with family members for a subsample of respondents in the United States between the ages of 23 and 55. I find that employment uncertainty is related to poor sleep outcomes while also being related to greater time spent in healthy behaviors and time with family members. Respondents who are unemployed sleep longer and are more likely to report sleeplessness than the employed; living in states with poor economic conditions (i.e. higher unemployment rates) is related to lower odds of having a sleepless episode but increases the odds of a sleep disruption; and those interviewed during the recession are more likely to sleep more than 9 hours, report sleeplessness, and less likely to report a sleep disruption, compared to respondents who were interviewed before the recession began. Being unemployed is related to exercise, active travel, health-related self-care, and eating breakfast, whereas state economic conditions and historical time period are not as consistently related to healthy behaviors. Poor state economic conditions were related to increased likelihood of spending time in health-related self-care, while being interviewed during the years marked by the recession was related to spending more time in active travel and increased odds of eating breakfast. In regards to family time, being unemployed and living in a state with worse economic conditions (as captured by higher unemployment rates) are related to greater odds of spending time with family members as well as more time spent on average while the recession is related to more time spent with immediate family and less time with extended family members. Though being unemployed, living in states with poor economic conditions, and being interviewed during the Great Recession do not moderate one another in each instance, I find that being unemployed is moderated by other indicators of employment insecurity. In the sleeplessness models becoming unemployed in the 2 to 5 months prior to participating in the ATUS and being interviewed during the recessionary years of 2008 and 2009 were related to lower probabilities of reporting sleeplessness than the employed before the recession. In addition, the declining probability of reporting sleeplessness with increasing state unemployment rates had a smaller slope in 2009 than before the recession. In the health models the long-term unemployed in states with high unemployment tend to spend more time in active travel than the long-term unemployed in low unemployment states and the recently unemployed interviewed during the recessionary years have greater probability of eating breakfast than the employed interviewed before the recession. In contrast, the recently unemployed spend less time in active travel in high unemployment states compared to low unemployment states. In the family models I find that unemployed parents spend more time with children under 6 when they are living in states with high unemployment rates and are interviewed during the recessionary years. The recently unemployed spend less time with extended family members if they are interviewed during the recession while the longer-term unemployed spend more time with their parents if they were interviewed during this same period. In addition, socio-demographic characteristics - particularly gender - are important moderators of how employment insecurity is related to time sleeping, in healthy behaviors, and with family members. Unemployed men experienced more sleeplessness as did men living in states with higher unemployment rates. Unemployed men during the recession spent more time in active travel but spent less time in active travel when living in states with high unemployment rates. Men were less likely to eat breakfast when unemployed and spent less time in health-related self care when living in states with high unemployment rates. Unemployed women spend more time with children and extended family members. Life stage also moderates the relationship between the employment uncertainty and sleep outcomes and healthy behaviors. In particular, older respondents without children and parents spend more time in sleeplessness when living in states with higher state unemployment rates than do the younger respondents without children. Parents of children under 18 also spend less time in exercise and are less likely to eat breakfast during the recession. The employment status of spouses/partners moderates the relationships between employment uncertainty and healthy behaviors and time with family members. Those with employed spouses or partners spend more time in active travel in higher unemployment rate states, while those with spouses or partners who are not employed spend less time in active travel. The long-term unemployed with an employed spouse or partner spend more time with children under 6 and their own parents. Lastly, education moderates the relationships between employment uncertainty and time with family members. During the recession, those with lower levels of education spend more time with parents. In addition, the long-term unemployed with lower levels of education spend more time with extended family members.