Exposure to the COVID-19 Stock Market Crash and its Effect on Household Expectations
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Date
2020-05-21
Author
Hanspal, Tobin
Weber, Annika
Wohlfart, Johannes
SAFE No.
279
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Abstract
We survey a representative sample of US households to study how exposure to the COVID-19 stock market crash affects expectations and planned behavior. Wealth shocks are associated with upward adjustments of expectations about retirement age, desired working hours, and household debt, but have only small effects on expected spending. We provide correlational and experimental evidence that beliefs about the duration of the stock market recovery shape households' expectations about their own wealth and their planned investment decisions and labor market activity. Our findings shed light on the implications of household exposure to stock market crashes for expectation formation.
Research Area
Household Finance
Keywords
coronavirus, stockholding, wealth shocks, expectation formation, inequality
JEL Classification
D14, D31, D83, D84, D91
Research Data
Topic
Trading and Pricing
Saving and Borrowing
Household Finance
Saving and Borrowing
Household Finance
Relations
1
Publication Type
Working Paper
Link to Publication
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- LIF-SAFE Working Papers [334]