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Seminar in Economics | with Kieran Larkin

Department of Economics welcomes you to a seminar with Kieran Larkin, Institute for International Economic Studies (IIES).

Welcome to this Higher Seminar in Economics organized by the Department of Economics, SSE. The seminar speaker is Kieran Larkin, IIES, who will present

"Robust Consumption Inference: extracting recession expectations from a restricted consumption basket"


This paper investigates how to recover households’ expectations from consumption data when the consumption basket undergoes dramatic changes. I study consumption behavior during the Covid recession and subsequent recovery. Initially, household consumption declined significantly due to Government restrictions and changing behavior. I propose a methodology for computing a measure of robust consumption that identifies a subset of goods and services that is informative about prevailing economic circumstances. Con-structing this measure in micro data, reveals new facts about the Covid recession, such as differences in the response of robust consumption by education. I combine this measure of consumption with a sophisticated life-cycle model, featuring three consumption goods, and use it to estimate households expectations during the recession and recovery when subject to a range of shocks. This delivers estimates of changing household perceptions of the persistence of the economic shocks during the course of the Covid recession, and the strength and causes of the subsequent recovery. The analysis highlights the importance of capturing dynamically changing expectations of households during a recession and the contribution of government transfers to the recovery spending boom.


The seminar takes place at Stockholm School of Economics, Sveavägen 65, room A350.

Please contact nicola.donohoe@hhs.se if you have any questions.

Dept. of Economics Economics Seminar in economics