Omicron Delta Epsilon Graduate Student Session
Paper Session
Friday, Jan. 6, 2023 8:00 AM - 10:00 AM (CST)
- Chair: Subarna K. Samanta, The College of New Jersey
Effect of Social Distancing Policies on Labor Market Outcomes Given the Partisanship: Evidence from County-Level Company Data and Cellphone Data
Abstract
During the novel, COVID-19 pandemic, federal, state, and local policymakers adopted social distancing policies to restrict the spread. At the same time, these health policies directly [closure of non-essential businesses] and indirectly [more social distancing means fewer people were going to work] affected the labor market outcomes. Also, given the peoples political preferences, the impact of these policies has been largely unexplored. We find that introduction of these policies was associated with a significant reduction in the number of devices going to part-time work, total weekly hours worked, number of employees, and percentage of weekly wages in a company. Our paper finds evidence that health policies impact labor market outcomes and partisanship influences compliance. Findings suggest non-partisan messaging could improve both lives and livelihoods.Fiscal Policy and Asset Prices in a Dynamic Factor Model with Cointegrated Factors
Abstract
This paper investigates the effects of fiscal policy on asset prices using structural dynamic factor model [SDFM] with cointegrated factors. Much of the focus in the literature were on monetary policy and asset prices, with little attention to fiscal policy. The literature highlighted the importance of asset markets over the business cycle, but little focus on how fiscal policy actions impact asset prices. Also, structural VAR [SVAR] appears to be the widely used method in the literature with regards to policy innovations, but they are prone to limited information and non-invertibility problem. In this paper I estimated the impulse response functions [IRFs] of stock price and house to government spending shocks using a quarterly dataset with 207 macroeconomic and financial variables obtained from St. Louis FRED website. The factors were extracted using principal components applied to the non-stationary data and an unrestricted VAR is specified with the non-stationary factors to account for cointegration in the SDFM framework. Scree plots and information criteria were used to determine the number of factors to include in the model. Government spending shock was identified by combining named factor normalization and unit effect normalization and applying Cholesky decomposition. It was revealed that the common factors explained substantial variation in real variables, implying that the factors were able to capture changes in the business cycle. It was also noted that the common factors explained smaller variation in house prices, which indicate that house price are driven by local dynamics. Tthe IRFs shows that both stock price and house price responded positively to government spending shock and the effects were persistent and not temporal as suggested in the literature. Results from forecast error variance decomposition shows that government spending shock explained high percentage of the forecast error variance in real GDP, consumption, and fixed investment.The Effects of Health Shocks on Time Spent in Home Production
Abstract
In this paper, I examine the causal impact of health shocks on time spent in home production among retirees using the Health and Retirement Study data. On the one hand, an increase in home production can shelter consumption from falling net income due to medical costs increase (income effect). On the other hand, home production requires effort, which may be increasingly difficult after the health shock (impairing effect). To understand these two effects, I evaluate two groups of health shocks, those that result in high medical costs and those that result in activities of daily living limitations. I find strong evidence for impairing effect, i.e, home production decreases, and the decline can be as high as 16% of average home production time. I also find that the decrease in home production is not fully offset by an increase in help received or in consumption spending. My findings suggest that when home production is taken into account, health shocks are more damaging than suggested by only monetary costs. Therefore, additional considerations should be given to policies that provide non-pecuniary support to unhealthy people, such as home-and-community-based services.Discussant(s)
Wisdom Takumah
,
Emory University
Suchika Chopra
,
University of Georgia
Bingjin Xue
,
Lehigh University
Ruchika Rungta
,
Auburn University
JEL Classifications
- A1 - General Economics
- Y8 - Related Disciplines