Charles R. Hulten and Marshall B. Reinsdorf (eds)
- Published in print:
- 2015
- Published Online:
- September 2015
- ISBN:
- 9780226204260
- eISBN:
- 9780226204437
- Item type:
- book
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226204437.001.0001
- Subject:
- Economics and Finance, Economic Systems
This book examines economic measurement in light of lessons learned in the financial crisis. One set of papers investigates how gaps in the data contributed to our failure to spot emerging risks to ...
More
This book examines economic measurement in light of lessons learned in the financial crisis. One set of papers investigates how gaps in the data contributed to our failure to spot emerging risks to financial stability before and during the crisis. These papers describe strategies for filling these gaps and for coping with the inherent dynamism of the financial marketplace. Another set of papers discusses recent changes in measuring financial activity in the areas of defined benefit pension plans and cross border investment income. These change the picture of saving by sectors, particularly households and state and local governments, and help explain some anomalies in net investment income receipts of the US. Other papers use micro data to investigate the effects of the crisis on households and nonfinancial businesses. They find that a third of households suffered financial distress during the crisis, but experiences varied greatly, and a sizeable minority experienced gains in wealth. The high variance of outcomes may have affected aggregate spending because households reported they would respond more strongly to losses in the value of their assets than to gains. Also increases in personal saving can be traced to changes in households’ borrowing, not increased contributions to savings and retirement accounts. Finally, nonfinancial businesses were strongly affected by a loss of access to external sources of funding for their liquidity and investment needs. The empirical results suggest that policies that increase access to credit might be more effective in ending the recession than policies aimed at stimulating demand.Less
This book examines economic measurement in light of lessons learned in the financial crisis. One set of papers investigates how gaps in the data contributed to our failure to spot emerging risks to financial stability before and during the crisis. These papers describe strategies for filling these gaps and for coping with the inherent dynamism of the financial marketplace. Another set of papers discusses recent changes in measuring financial activity in the areas of defined benefit pension plans and cross border investment income. These change the picture of saving by sectors, particularly households and state and local governments, and help explain some anomalies in net investment income receipts of the US. Other papers use micro data to investigate the effects of the crisis on households and nonfinancial businesses. They find that a third of households suffered financial distress during the crisis, but experiences varied greatly, and a sizeable minority experienced gains in wealth. The high variance of outcomes may have affected aggregate spending because households reported they would respond more strongly to losses in the value of their assets than to gains. Also increases in personal saving can be traced to changes in households’ borrowing, not increased contributions to savings and retirement accounts. Finally, nonfinancial businesses were strongly affected by a loss of access to external sources of funding for their liquidity and investment needs. The empirical results suggest that policies that increase access to credit might be more effective in ending the recession than policies aimed at stimulating demand.
Charles R. Hulten and Marshall B. Reinsdorf
- Published in print:
- 2015
- Published Online:
- September 2015
- ISBN:
- 9780226204260
- eISBN:
- 9780226204437
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226204437.003.0012
- Subject:
- Economics and Finance, Economic Systems
On the eve of the recent financial crisis, few observers of the economy were pessimistic, in part because the data commonly used to inform economic policy gave no indication of the magnitude of the ...
More
On the eve of the recent financial crisis, few observers of the economy were pessimistic, in part because the data commonly used to inform economic policy gave no indication of the magnitude of the approaching crisis and Great Recession. In retrospect, the data trails left by the crisis are all too apparent. Part of the visibility problem is attributable to the period of significant innovation and structural change in financial institutions and instruments in the decades before the onset of the crisis. The chapters in this volume identify areas where technical improvements in measurement procedures are needed in order to better understand developments in finance and their effects on households, businesses, and the international financial situation of the US economy. They use new methods to measure and analyze defined benefit pension plans and international financial flows, and specialized micro data sets to examine how households and businesses fared in the financial crisis. Their themes include the data gaps revealed by the financial crisis, the development of more complete financial and economic data and statistics, and approaches to data collection and analysis that may help us see, understand and manage potential sources of systemic risk, disequilibria and poor economic performance.Less
On the eve of the recent financial crisis, few observers of the economy were pessimistic, in part because the data commonly used to inform economic policy gave no indication of the magnitude of the approaching crisis and Great Recession. In retrospect, the data trails left by the crisis are all too apparent. Part of the visibility problem is attributable to the period of significant innovation and structural change in financial institutions and instruments in the decades before the onset of the crisis. The chapters in this volume identify areas where technical improvements in measurement procedures are needed in order to better understand developments in finance and their effects on households, businesses, and the international financial situation of the US economy. They use new methods to measure and analyze defined benefit pension plans and international financial flows, and specialized micro data sets to examine how households and businesses fared in the financial crisis. Their themes include the data gaps revealed by the financial crisis, the development of more complete financial and economic data and statistics, and approaches to data collection and analysis that may help us see, understand and manage potential sources of systemic risk, disequilibria and poor economic performance.
