The asymmetric behavior of household consumption under the business cycle

Kuang-Ta Lo, Ta-Sheng Chou and Stephanie Tsui

The North American Journal of Economics and Finance, 2020, vol. 54, issue C

Abstract: In this study, we examine whether and to what extent the pattern of household consumption is asymmetrically sensitive to economic changes. We use a threshold model with error correction to characterize household consumption under the business cycle. Using data from the 1979–2014 Survey of Family Income and Expenditure in Taiwan, we find that household consumption has pro-cyclical characteristics during the business cycle. More importantly, household consumption responds asymmetrically to economic fluctuations such that changes in consumption tend to be larger during expansions than during downturns. Furthermore, the nature of this asymmetry differs across household income quantiles.

Keywords: Cyclicality; Asymmetry; Business cycle; Household consumption (search for similar items in EconPapers)
JEL-codes: D10 E32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:54:y:2020:i:c:s1062940818304029

DOI: 10.1016/j.najef.2019.03.017

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