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Household Behaviour in Ireland, Sweden, the US and the UK under Rationing

L. Cermeño, Alexandra LU orcid ; Kenny, Seán LU and Fitzgerald, John (2021) In TEP Working Paper
Abstract
The pandemic-induced economic crisis has seen a massive build up in savings across Europe and North America as households could not spend their income as they normally would. The last time that consumers were seriously rationed was during the Second World War. This paper models the behaviour of households during the War years and its immediate aftermath in Ireland, Sweden, the US and the UK. We first estimate overall consumption and then consider how total consumption was allocated over different categories of goods, including rationed goods. The model shows that consumers saved rather than spend on available unrationed goods and services. These savings were held in liquid form and, once the War was over and rationing eased, a consumption... (More)
The pandemic-induced economic crisis has seen a massive build up in savings across Europe and North America as households could not spend their income as they normally would. The last time that consumers were seriously rationed was during the Second World War. This paper models the behaviour of households during the War years and its immediate aftermath in Ireland, Sweden, the US and the UK. We first estimate overall consumption and then consider how total consumption was allocated over different categories of goods, including rationed goods. The model shows that consumers saved rather than spend on available unrationed goods and services. These savings were held in liquid form and, once the War was over and rationing eased, a consumption boom transpired. However, only some of the savings were spent on previously rationed goods as significant excess savings were also converted into physical assets in the housing market. There is evidence that this pattern is being repeated as the Covid-19 crisis eases. (Less)
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author
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type
Working paper/Preprint
publication status
published
subject
in
TEP Working Paper
issue
1221
language
English
LU publication?
yes
id
f0cd2fd7-1eb9-48dd-ac80-f27eac6ff3fd
alternative location
https://www.tcd.ie/Economics/TEP/2021/tep1221.pdf
date added to LUP
2021-12-04 23:44:23
date last changed
2021-12-08 02:15:43
@misc{f0cd2fd7-1eb9-48dd-ac80-f27eac6ff3fd,
  abstract     = {{The pandemic-induced economic crisis has seen a massive build up in savings across Europe and North America as households could not spend their income as they normally would. The last time that consumers were seriously rationed was during the Second World War. This paper models the behaviour of households during the War years and its immediate aftermath in Ireland, Sweden, the US and the UK. We first estimate overall consumption and then consider how total consumption was allocated over different categories of goods, including rationed goods. The model shows that consumers saved rather than spend on available unrationed goods and services. These savings were held in liquid form and, once the War was over and rationing eased, a consumption boom transpired. However, only some of the savings were spent on previously rationed goods as significant excess savings were also converted into physical assets in the housing market. There is evidence that this pattern is being repeated as the Covid-19 crisis eases.}},
  author       = {{L. Cermeño, Alexandra and Kenny, Seán and Fitzgerald, John}},
  language     = {{eng}},
  note         = {{Working Paper}},
  number       = {{1221}},
  series       = {{TEP Working Paper}},
  title        = {{Household Behaviour in Ireland, Sweden, the US and the UK under Rationing}},
  url          = {{https://www.tcd.ie/Economics/TEP/2021/tep1221.pdf}},
  year         = {{2021}},
}