Depressed Demand

Giang Nghiem

VfS Annual Conference 2020 (Virtual Conference): Gender Economics from Verein für Socialpolitik / German Economic Association

Abstract: Using a survey of Dutch households, we find that individuals who have experienced higher national unemployment rates over their lifetime save more and borrow less, after controlling for aggregate shocks, income, wealth, and demographics. These results are consistent with experience-based learning and inconsistent with rational learning. Furthermore, these individuals find it more important to save for retirement and are more worried about losing their job. These observations suggest that periods of high unemployment depress aggregate demand because of persistently more pessimistic beliefs.

JEL-codes: E21 E32 E71 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mac
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