Working Paper: NBER ID: w18510
Authors: Jonathan A. Parker
Abstract: This chapter describes a system, called the LEADS system, for providing market participants, regulators, and households with information on the reallocation of resources within, from, and to the household sector in response to macroeconomic events. The household sector is both a propagator of shocks to the economy, as wealth is redistributed across households with differing propensities to consume, and an originator of risky claims held in systemically important places, as losses are shifted from households to creditors such as financial institutions. Information about these exposures, like information generally, is conveyed by prices and so is under-produced by markets. The LEADS system - collection, analysis, and distribution of information on household exposures to macroeconomic risk factors - can potentially lead to better macroeconomic performance through better informed public policy and private decision- making
Keywords: No keywords provided
JEL Codes: E44; G01; G18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Wealth distribution (D31) | Consumption behavior (D10) |
| Household financial literacy (G53) | Wealth redistribution (D31) |
| Underproduction of information (D83) | Mispriced risks (G19) |
| Low financial sophistication (G53) | Amplified risks (D81) |
| Household balance sheets (G59) | Systemic risks (F65) |
| Increased household debt (G51) | Declining asset values (G32) |
| Declining asset values (G32) | Consumer demand (D12) |
| Consumer demand (D12) | Broader economic repercussions (F69) |