The DOI matches its Crossref record; 2 of the 2 references it cites were found in a registry or an index.
How Individuals Respond to a Liquidity Shock: Evidence from the 2013 Government Shutdown
Open accessAbstract
Using comprehensive account records, this paper examines how individuals adjusted spending and saving in response to a temporary drop in liquidity due to the 2013 U.S. government shutdown.The shutdown cut paychecks by 40% for affected employees, which was recovered within 2 weeks.Because the shutdown affected only the timing of payments, it provides a distinctive experiment allowing estimates of the response to a liquidity shock holding income constant.Spending dropped sharply, implying a naïve estimate of 58 cents less spending for every dollar of lost liquidity.This estimate overstates the consumption response.While many individuals had low liquid assets, they used multiple sources of short-term liquidity to smooth consumption.Sources of short-term liquidity include delaying recurring payments such as for mortgages and credit card balances.
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A number of recent papers document marginal propensities to consume out of transitory income that cannot be explained by reasonably-parameterized standard incomplete markets models without severe liquidity constraints.
“A number of recent papers document marginal propensities to consume out of transitory income that cannot be explained by reasonablyparameterized standard incomplete markets models without severe liquidity constraints.”
From Buy Now, Pay Later Credit: User Characteristics and Effects on Spending Patterns (2022) · cites this paper as Gelman, Kariv, Shapiro, Silverman, and Tadelis (2015)
The paper’s “Paycheck Income and Total Spending” section estimates a substantial spending response to the temporary paycheck reduction, and its Conclusion discusses households with low liquid assets. But the cited paper does not establish that reasonably parameterized standard incomplete-markets models cannot explain such responses without severe liquidity constraints; it studies a brief delay in pay and ways workers smooth consumption through it. Page numbers were not available in our copy. (LLM, conf=0.85)
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Cites
The Consumption Response to Income Changes
Jappelli, T., & Pistaferri, L. (2010) · Annual Review of Economics · doi:10.1146/annurev.economics.050708.142933 · Cited by 704
The Economic Stimulus Payments of 2008 and the Aggregate Demand for Consumption
Broda, C., & Parker, J. (2014) · doi:10.3386/w20122 · Cited by 102
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Research works printed but not linked: 18
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Buy Now, Pay Later Credit: User Characteristics and Effects on Spending Patterns
Di Maggio, M., Katz, J., & Williams, E. (2022) · Social Science Research Network · doi:10.2139/ssrn.4198320 · Cited by 15
Metadata
- Authors
- Gelman, M., Kariv, S., Shapiro, M., Silverman, D., & Tadelis, S.
- Affiliations
- National Bureau of Economic Research (US)
- Venue
- National Bureau of Economic Research
- Publisher
- National Bureau of Economic Research
- Published
- 2015-03
- OpenAlex
- W2807290823
- Cited by
- 41
- References
- 2
- Citations by year
- 2026: 2 · 2025: 5 · 2024: 7 · 2022: 6 · 2021: 5 · 2020: 3 · 2019: 8 · 2017: 2 · 2016: 2
- Type
- report
- Language
- en
- Open access
- green
- doi.org
- Locations
- National Bureau of Economic Research (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Funders
- National Science Foundation (1131500)
- Alfred P. Sloan Foundation
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Literacy, Pension, Retirement Analysis
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
- Keywords
- liquidity shocks, household expenditure, household savings, consumption smoothing, short-term liquidity, liquid assets, mortgage payments, credit card balances, household accounts
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