Modeling the Consumption Response to the CARES Act / Christopher D. Carroll, Edmund Crawley, Jiri Slacalek, Matthew N. White.

Format:

Book

Author/Creator:

Carroll, Christopher D.

Contributor:

National Bureau of Economic Research.

Crawley, Edmund.

Slacalek, Jiri.

White, Matthew N.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27876.

NBER working paper series no. w27876

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

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.

Notes:

Print version record

September 2020.