VGSF - WU Vienna - LC

Michael Weber, The University of Chicago Booth School of Business

online via Microsoft Teams 10:30 - 11:30

Organizer WU Vienna

The Fin­ance Brown Bag Sem­inar is held by the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance (WU Vi­enna) and the Vi­enna Gradu­ate School of Fin­ance (VGSF). It serves as a present­a­tion plat­form for PhD stu­dents, fac­ulty mem­bers, and vis­it­ors. An over­view of BBS on the web­site of the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance.

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Septem­ber 2nd, 2020, 10:30-11:30 am
You can par­ti­cip­ate in the sem­inar on­line via Mi­crosoft Teams
The meet­ing will open at 10:15 am for you to dial in. To join the stream please fol­low this link.
In case of tech­nical prob­lems please con­tact: patrick.weis­s@wu.ac.at

Mi­chael Weber, The Uni­versity of Ch­icago Booth School of Busi­ness

Title: "The Cost of the COV­ID-19 Crisis: Lock­downs, Mac­roe­co­nomic Ex­pect­a­tions, and Con­sumer Spend­ing"

Ab­stract

We study how the dif­fer­en­tial tim­ing of local lock­downs due to COV­ID-19 caus­ally af­fects house­holds’ spend­ing and mac­roe­co­nomic ex­pect­a­tions at the local level us­ing several waves of a cus­tom­ized sur­vey with more than 10,000 respond­ents. About 50% of sur­vey par­ti­cipants re­port in­come and wealth losses due to the corona virus, with the aver­age losses be­ing $5,293 and $33,482 re­spect­ively. Ag­greg­ate con­sumer spend­ing dropped by 31­log per­cent­age points with the largest drops in travel and cloth­ing. We find that house­holds liv­ing in counties that went into lock­down earlier ex­pect the un­em­ploy­ment rate over the next twelve months to be 13 per­cent­age points higher and con­tinue to ex­pect higher un­em­ploy­ment at ho­ri­zons of three to five years. They also ex­pect lower fu­ture in­fla­tion, re­port higher un­cer­tainty, ex­pect lower mort­gage rates for up to 10 years, and have moved out of for­eign stocks into li­quid forms of sav­ings. The im­pos­i­tion of lock­downs can ac­count for much of the de­cline in em­ploy­ment in re­cent months as well as de­clines in con­sumer spend­ing. While lock­downs have pro­nounced ef­fects on local eco­nomic con­di­tions and house­holds’ ex­pect­a­tions, they have little im­pact on ap­proval rat­ings of Con­gress, the Fed, or the Treas­ury but lead to de­clines in the ap­proval of the Pres­id­ent.



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