Exposure to the Covid-19 Stock Market Crash and its Effect on Household Expectations

Tobin Hanspal, Annika Weber and Johannes Wohlfart

No 8244, CESifo Working Paper Series from CESifo

Abstract: We survey a representative sample of US households to study how exposure to the Covid-19 stock market crash affects expectations and planned behavior. Wealth shocks are associated with upward adjustments of expectations about retirement age, desired working hours, and household debt, but have only small effects on expected spending. We provide correlational and experimental evidence that beliefs about the duration of the stock market recovery shape households’ expectations about their own wealth and their planned investment decisions and labor market activity. Our findings shed light on the implications of household exposure to stock market crashes for expectation formation.

Keywords: coronavirus; stockholding; wealth shocks; expectation formation; inequality (search for similar items in EconPapers)
JEL-codes: D14 D31 D83 D84 D91 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-gen
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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