Martha L. Olney

Avoiding Default: The Role of Credit in the Consumption Collapse of 1930

High consumer indebtedness threatens future consumption spending if default is expensive. Consumer spending collapsed in 1930, turning a minor recession into the Great Depression. Households were shouldering an unprecedented burden of installment debt. Down payments were large. Contracts were short. Equity in durable goods was therefore acquired quickly. Missed installment pa5niients triggered repossession, reducing consumer wealth in 1930 because households lost all acquired equity. Cutting consumption was the only viable strategy in 1930 for avoiding default. Institutional changes lowered the cost of default by 1938. When recession began again, indebted households chose to default rather than reduce consumption.

Fertility and the Standard of Living in Early Modern England: in Consideration of Wrigley and Schofield

E. A. Wrigley and R. S. Schofields recent volume on the results of extensive research by the Cambridge Group into the population history of early modern England permits renewed examination of the relationship between fertility and economic conditions. On the basis of the records of Anglican baptisms burials and marriages taken from a sample of English parish registers Wrigley and Schofield reconstructed national total of births deaths marriages and population for the 1538-1873 period. From these totals several measures of fertility were calculated at 5-year intervals for the 1541-1871 period. Wrigley and Schofield offered 2 reasons for expecting that changes in fertility would lag behind changes in the standard of living as it did: marriage practices and eventually fertility of 1 generation might have been affected by the economic circumstances of the previous generation; and since short-term fluctuations cannot be immediately discerned from longterm movements it could easily have taken some years for an individual to conclude that the trend of economic conditions had in fact changed. As a proxy for the standard of living Wrigley and Schofield constructed an annual real wage index using the Phelps Brown and Hopkins wage data and price data as a base. To approximate the length of the lag between changes in real wages and in fertility they compared the turning points of an 11 year centered moving average of their real wage index and the turning points of their series on the gross reproduction rate. Identifying the turning points of the real wage index as 1610 (trough) 1750 (peak) and 1805 (trough) they concluded that changes in real wages were followed by changes in fertility with a lag averaging 50 years. The Wrigley Schofield method of estimating the length of the lag between real wages and fertility examines only the 3 turning points of the 2 series. Interest here is with the relationship between economic and demographic variables not merely with their turning points. The method fails to utilize all the data. It is demonstrated that their method seriously exaggerates the length of the lag.

Demand for consumer durable goods in 20th century America

Abstract In the United States in the 1920s, households purchased more durable goods and substituted these goods for conventional instruments of saving in their asset portfolios. Using a gradual stock-adjustment model, demand for durable goods is estimated by commodity group for several periods between 1902 and 1983. Demand changed after World War I for all durable goods except china and house furnishings. Increased availability of installment credit helps explain the simultaneous shifts in demand and saving.

Forging On-Campus Connections to Enhance Undergraduate Student Reasoning, Writing, and Research Skills.

ABSTRACT Research and writing are critical components of an undergraduate education. Partnerships between economics faculty and campus resources can improve student research and writing skills. Here, the authors describe programs at three different campuses that bridge department and campus resources: the Empirical Reasoning Lab at Barnard College, the Writing Program at Carleton College, and the Librarys Data Lab at the University of California, Berkeley. The authors describe each programs mission and structure, provide examples of its impact on student learning, and discuss administrative factors (and hurdles) to consider in implementing similar programs elsewhere.

The Undergraduate Origins of PhD Economists: The Berkeley Experience.

The University of California, Berkeley sends more undergraduate students to economics PhD programs than any other public university. While this fact is surely a function of its size, there may be lessons from the Berkeley experience that others could adopt. To investigate why Berkeley generates so many economics PhD students, the author convened and interviewed two groups: economics student services staff and a self-selected focus group of twelve economics undergraduates who plan to apply to PhD programs. Four factors came up repeatedly in these conversations: math preparation, advanced track for theory courses, research opportunities, and availability of information. A fifth factor was implicit in the conversations: peer effects.

THE RISE OF SERVICES, DEINDUSTRIALIZATION, AND THE LENGTH OF ECONOMIC RECOVERY

Economic recovery is longer in service-providing economies than in goods-producing economies. Services cannot be produced and inventoried ahead of demand; goods can. We are the first to document this macroeconomic repercussion of the sectoral shift away from the secondary sector toward the tertiary sector, that is, of deindustrialization and the rise of services. We distinguish between nontradable services and all other sectors, using U.S. state-level employment data for post-1960 recessions. Concerns over the endogeneity of services are addressed in two ways: by using 3-year pre-recession averages of sector shares, and separately by invoking instrumental variables. Our results are robust to alternative specifications. The increase in service production and deindustrialization in the United States over the last half-century lengthens the trough-to-peak employment recovery from recessions by about 40%. (JEL E24, E32, L80, N12)