Ryan R. Brady

How the Housing and Financial Wealth Effects Have Changed over Time

We measure the “evolution” of the housing and financial wealth effects in the United States over different time periods from 1952 to 2009. To understand how the housing and financial wealth effects have changed over time, we use a combination of recent time series techniques, including system structural break tests and linear projections, to estimate impulse response functions of consumption to both forms of wealth over relatively short sub-samples. Our key results are that the housing wealth effect gets larger over time, with the largest effect apparent after 1998; while the financial wealth effect diminishes over the same sub-samples, even over a period that includes the equities boom of the 1990s. Our results provide insight into what mechanisms may explain the differing responses of consumption to wealth.

Consumer Credit, Liquidity, and the Transmission Mechanism of Monetary Policy

That the lending channel is alive and well for consumer lending is at first glance a compelling notion given the growth in consumer credit. However, this paper demonstrates with disaggregated monthly and quarterly consumer credit data that the consumer loan-supply effect has diminished over time. Contrary to assumptions motivating the lending channel, households are not constrained in accessing credit from any lender (or in any form) in response to a monetary shock. The findings of this paper have important implications for research on the monetary transmission mechanism beyond the lending channel and for business cycle research in general.

Competing Explanations of U.S. Defense Industry Consolidation in the 1990s and Their Policy Implications

Was the consolidation of defense industry in the 1990s driven by U.S. Department of Defense (DOD) directives, or was it driven instead by the same forces that drove consolidation in many other sectors of the U.S. economy in the 1990s? To better understand the roles of DOD policy and economy-wide forces in shaping the U.S. defense industry, we test for structural breaks in defense industry and spending data and compare our findings to those relating to other sectors and the general economy. We identify structural breaks in the defense-related data in the early 1980s and throughout the 1990s, roughly consistent with changes in the U.S. economy, including broader merger trends. Overall, our results are more consistent with the view that economy-wide factors drove defense industry consolidation, largely independent of the DOD policy changes that occurred early in the 1990s.