The 2008 Economic-Financial Crisis: 10 Years After
Sunday, Jan. 7, 2018 8:00 AM - 10:00 AM
- Chair: Christine Ngo, University of Denver
Repairing Household Balance Sheets and Restoring Economic Growth: What Fiscal Policy Can Do
AbstractEmploying a Minsky/Godley/Kalecki framework, this paper will look at household debt before and after the crisis. Its main focus will be on the public policies that can facilitate household deleveraging and the repair of household balance sheets following financial crises or large debt buildups, such as the one that preceded the great financial crisis. The paper will also focus on the role of the public sector balance sheet in facilitating private (household) deleveraging.
No End in Sight? The Widening Racial Wealth Gap Since The Great Recession
AbstractThe difference in wealth between African-Americans and Hispanics, on the one hand, and whites on the other hand, has remained persistently high for decades. It even increased in the immediate aftermath of the Great Recession -- through 2013 -- as African-Americans and Hispanics had larger shares of their wealth tied up in residential real estate and owed more money on their houses than was the case for whites and thus suffered larger losses in the housing market crash. The racial wealth gap likely continued to stay high and possibly widen through 2016, largely because African-Americans and Hispanics were much less likely to own houses than was the case for whites and thus were less likely to see improving houses wealth. They also were also less likely to own stocks and thus possibly did not benefit as much from the stock market boom after the Great Recession And, there is some indication that costly installment debt, especially student and car loans, rose faster for African-Americans and Hispanics than for whites in the years since the Great Recession. All of these trends suggest that the racial wealth gap may even have further worsened after 2013. This paper will use the latest data from the Federal Reserve's triennial Survey of Consumer Finances to document the racial wealth gap from 2007 through 2016 with particular emphasis on the years after the Great Recession ended in 2009.
Female-Headed Households and the Pre-Crisis Credit Expansion: Evidence from the Surveys of Consumer Finance
AbstractIn the lead-up to the 2008 Financial Crisis, household debt increased as lenders extended credit to previously credit-rationed borrowers. However, few empirical studies have attempted to identify whether some borrowers were more affected by the credit expansion, particularly along the dimensions of race and gender. Dymski, Hernandez, and Mohanty (2013) trace a pattern of ``exclusion" followed by the ``superinclusion" of minority and female borrowers in mortgage lending. At the same time, gendered changes in post-secondary enrollment combined with rapidly rising tuition costs increased overall student debt and student debt held by women specifically. This analysis uses Survey of Consumer Finance data from 1995 to 2013 and a difference-in-difference identification strategy to investigate whether female-headed households experienced a disproportionate increase in borrowing activity during the pre-crisis credit expansion relative to male-headed households. To identify and distinguish between possible explanations for these gender disparities, I decompose debt by type and explore the mediating role played by age, income, and ``banked" status. The results indicate that household indebtedness and credit applications increased more for female-headed households than similarly-situated male-headed households prior to the crisis and remained higher for these households post-crisis. Lower-income and younger female household heads account for most of the gender differential in educational and mortgage debt growth prior to the crisis, while higher-income and older female household heads exhibited greater continued growth in educational debt post-crisis than male-headed households. Most of these gender differentials pre- and post-crisis are observed only among banked households. These results are consistent with the exclusion-to-superinclusion hypothesis and with the increasing prevalence of women among educational borrowers, particularly as a response to adverse labor market conditions.
Ten Years after the Crisis: A Lost Decade?
AbstractThis paper studies the changes in income inequality since the Great Recession in 2008. Using data from the Federal Reserve’s Survey of Consumer Finance and data from the Luxembourg Income Study we see what effect the economic downturn had on the financial well-being of households and how these changes varied among households. While by most measures a majority of households (regardless of income level) were negatively affected by the Great Recession, lower-income households fared worse than higher-income households. In addition, higher-income households recovered more quickly from the downturn than lower-income household. The effects of consumer debt, bankruptcy and unemployment exacerbated the rate of income inequality and continues to have lasting effects on the macroeconomy and means that we are not yet out of the woods.
- B5 - Current Heterodox Approaches