Link to the University of Pittsburgh
Link to the University Library SystemContact us link
AEI Banner

The effect of unemployment, arrears and negative equity on consumption: Ireland in 2009/10. ESRI WP457. May 2013

Gerlach-Kristen, Petra (2013) The effect of unemployment, arrears and negative equity on consumption: Ireland in 2009/10. ESRI WP457. May 2013. [Working Paper]

[img] PDF - Published Version
Download (650Kb)

    Abstract

    Since the onset of the financial crisis, income and consumption have fallen sharply in Ireland, particularly for young households. This paper shows that young households are more likely than older ones to be exposed to unemployment, arrears and negative equity. These may give rise to credit constraints and buffer-stock savings. Savings may be built up not only to finance future consumption, but also to deleverage, since high indebtedness makes the access to additional credit more difficult. We show that the permanent income hypothesis, which posits that consumption should evolve more smoothly than actual income, apparently fails to hold for households in negative equity, at risk thereof and at risk of unemployment. This may have caused much of the decline in aggregate consumption during the crisis.

    Export/Citation:EndNote | BibTeX | Dublin Core | ASCII (Chicago style) | HTML Citation | OpenURL
    Social Networking:
    Item Type: Working Paper
    Subjects for non-EU documents: Countries > Ireland
    EU policies and themes > Policies & related activities > economic and financial affairs > general
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Economic and Social Research Institute (ESRI), Dublin > ESRI Working Papers
    Depositing User: Alyssa McDonald
    Official EU Document: No
    Language: English
    Date Deposited: 25 Sep 2017 15:12
    Number of Pages: 22
    Last Modified: 25 Sep 2017 15:12
    URI: http://aei.pitt.edu/id/eprint/88074

    Actions (login required)

    View Item

    Document Downloads