Not logged in.

Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Trading down and the business cycle
Organization Unit
  • Nir Jaimovich
  • Sergio Rebelo
  • Arlene Wong
  • English
Institution National Bureau of Economic Research
Series Name NBER Working Papers
Number 21539
Date 2017
Abstract Text We document two facts. First, during the Great Recession, consumers traded down in the quality of the goods and services they consumed. Second, the production of low-quality goods is less labor intensive than that of high-quality goods. When households traded down, labor demand fell, increasing the severity of the recession. We find that the trading-down phenomenon accounts for a substantial fraction of the fall in U.S. employment in the recent recession. We show that embedding quality choice in a business-cycle model improves the model's amplification and comovement properties.
Related URLs
Digital Object Identifier 10.3386/w21539
PDF File Download from ZORA
Export BibTeX
Keywords Recessions, quality choice, business cycles
Additional Information Paper Issued in September 2015, revised in October 2017