Debt and the Response to Household Income Shocks: Validation and Application of Linked Financial Account Data

By Scott R. Baker. Journal of Political Economy, 2018

243 citations recorded by the source corpus.

The increasing availability of data derived from linked consumer financial accounts has the potential to dramatically expand the potential for research. Examining the most comprehensive existing set of linked-account data, consisting of transaction and balance sheet data for millions of Americans, I demonstrate the power and versatility of such sources. I discuss advantages and concerns arising from this type of data and match a range of distributional moments to external sources. As one application, I test consumption elasticities across households with varying levels, and types, of debt. I find that heterogeneity in consumption elasticity can be explained entirely by credit and liquidity.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/c42983411af477ac888df6d6e8fa132e2a2abd16

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Citations in the corpus

Regulating Household Leverage (2019, unknown): “Baker (2018), for example, shows that highly indebted households cut consumption significantly more in response to negative income shocks relative to households with relatively little debt.”
What Would You Do with $500? Spending Responses to Gains, Losses, News, and Loans (2018, background): “…M arch 2021 (Johnson et al., 2006), Kilts–Nielsen Consumer Panel (Parker, 2017), or banks and other financial service providers (Gelman et al., 2014; Baker, 2018; Ganong and Noel, 2020; Aydin, 2018)—or by backing out expenditures from administrative data on income and wealth (Fagereng et al.,…”
Peer Effects in Product Adoption (2019, unknown): “…role of data from online services—such as Facebook, LinkedIn, Twitter, eBay, Mint, Trulia, and Zillow—in overcoming important measurement challenges across the social sciences (see, for example, Baker, 2018; Giglio et al., 2015; Einav et al., 2015; Piazzesi, Schneider, and Stroebel, 2015).”
Non-durable consumption and housing net worth in the Great Recession: Evidence from easily accessible data (2016, unknown): “Also Baker (2017) finds that higher levels of leverage are significantly related to a”
How Does Household Spending Respond to an Epidemic? Consumption during the 2020 COVID-19 Pandemic (2020, background): “See Baker (2018), Baker and Yannelis (2017), Olafsson and Pagel (2018), Baker, Kueng, Meyer and Pagel (2020), and Meyer and Pagel (2019).”
Consumer responses to the Covid‐19 crisis: evidence from bank account transaction data (2020, unknown): “Further, we create measures of spending in specific categories, such as groceries, travel and restaurants, based on a standardized coding of the type of goods and services each shop provides.(5) Finally, we create three composite spending categories that aggregate individual spending categories base”
Consumer Spending Responses to the COVID-19 Pandemic: An Assessment of Great Britain (2020, unknown): “Prior evidence suggest that such declines occur due to the onset of increased uncertainty, financial constraints or declining expectations regarding future income prospects (Baker & Yannelis, 2017; Baker, 2018; Gelman et al., 2020; Garmaise et al., 2020). Our study is closest in spirit to that of: A”