Modeling the Consumption Response to the CARES Act

Christopher Carroll, Edmund Crawley, Jiri Slacalek and Matthew White ()

No 27876, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: To predict the effects of the 2020 U.S. CARES Act on consumption, we extend a model that matches responses to past consumption stimulus packages. The extension allows us to account for two novel features of the coronavirus crisis. First, during lockdowns, many types of spending are undesirable or impossible. Second, some of the jobs that disappear during the lockdown will not reappear. We estimate that, if the lockdown is short-lived (the median point of view as we are writing in April 2020), the combination of expanded unemployment insurance benefits and stimulus payments should be sufficient to allow a swift recovery in consumer spending to pre-crisis levels. If the lockdown lasts longer (or there is a ‘second wave’), an extension of enhanced unemployment benefits will likely be necessary for consumption spending to recover quickly.

JEL-codes: D14 D83 D84 E21 E32 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-mac
Note: EFG ME
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Citations: View citations in EconPapers (19)

Published as Christopher D. Carroll & Edmund Crawley & Jiri Slacalek & Matthew N. White, 2021. "Modeling the Consumption Response to the CARES Act," International Journal of Central Banking, International Journal of Central Banking, vol. 17(1), pages 107-141, March.

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Related works:
Journal Article: Modeling the Consumption Response to the CARES Act (2021)
Working Paper: Modeling the consumption response to the CARES Act (2020)
Working Paper: Modeling the Consumption Response to the CARES Act (2020)
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