Econometrica

Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Sep, 2022, Volume 90, Issue 5

(S)Cars and the Great Recession

https://doi.org/10.3982/ECTA19037
p. 2319-2356

Orazio Attanasio, Kieran Larkin, Morten O. Ravn, Mario Padula

United States households' consumption expenditures and car purchases collapsed during the Great Recession and more so than income changes would have predicted. Using CEX data, we show that both the extensive and the intensive car spending margins contracted sharply in the Great Recession. We also document significant cross‐cohort differences in the impact of the Great Recession including a stronger reduction in car spending by younger cohorts. We draw inference on the sources of the Great Recession by investigating which shocks can explain household choices in a 60 period life‐cycle model with idiosyncratic and aggregate shocks fitted to aggregate and life‐cycle moments. We find that the Great Recession was caused by a combination of large aggregate income and wealth shocks, while cross‐cohort adjustment patterns imply a role for life‐cycle income profile shocks. We also find a role for car loan premia shocks in accounting for car spending and car loans.


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Supplement to "(S)Cars and the Great Recession"

Orazio Attanasio, Kieran Larkin, Morten O. Ravn, and Mario Padula

This zip file contains the replication files for the manuscript.

Supplement to "(S)Cars and the Great Recession"

Orazio Attanasio, Kieran Larkin, Morten O. Ravn, and Mario Padula

This appendix contains (i) data documentation; (ii) Details of the numerical solution method; (iii) Details on the measurement of shocks; (iv) An analysis of uncertainty shocks; (v) Details of the Clash for Clunkers analysis; (vi) Additional tables; (vii) Additional figures.