Household Consumption through Recent Recessions*. (12th June 2013)

• Record Type: Journal Article
• Authors: Crossley, Thomas F.; Low, Hamish; O'Dea, Cormac
• Is Part Of: Fiscal studies. Volume 34:Number 2(2013)
• Page Start: 203
• Page End: 229
• Publication Date: 2013-06-12
• Subjects: Finance, Public -- Periodicals; Fiscal policy -- Periodicals; Economic policy -- Periodicals; Finance, Public -- Great Britain -- Periodicals; 336.3
• DOI: 10.1111/j.1475-5890.2013.12003.x
• Languages: English
• ISSNs: 0143-5671

Abstract

<abstract abstract-type="main" xml:lang="en"> <title>Abstract</title> <p>This paper examines trends in household consumption and saving behaviour in each of the last three recessions in the UK. The 'Great Recession' has been different from those that occurred in the 1980s and 1990s. It has been both deeper and longer, but also the composition of the cutbacks in consumption expenditures differs, with a greater reliance on cuts to nondurable expenditure than was seen in previous recessions, and the distributional pattern across individuals differs. The young have cut back expenditure more than the old, as have mortgage holders compared with renters. By contrast, the impact of the recession has been similar across education groups. We present evidence that suggests that two aspects of fiscal policy in the UK in 2008 and 2009 – the temporary reduction in the rate of VAT and a car scrappage scheme – had some success in encouraging households to increase durable purchases.</p> </abstract>