This paper proposes a method for computing a unique longitudinal consumption measure for the total population of Norwegian households from administrative records, covering a period of almost 20 years. Administrative data has the advantage of full population coverage, avoiding problems with attrition or underrepresentation of high-income households. This is particularly useful for improving the measurement of heterogeneity in consumption behavior, and for measuring consumption distribution and inequality. Furthermore, longitudinal micro data with full population coverage provides unique opportunities to explore the underlying developments in aggregate consumption measures over time.
Imputing consumption from Norwegian income and wealth registry data, with Andreas Fagereng, Journal of Economic and Social Measurement, 42(1), 67-100, 2017.
Norwegian households' levels of housing wealth have since the banking crisis of the 90s become an ever more dominant part of households' portfolios. Low interest rates and easy access to mortgages have contributed to both increasing house prices and the corresponding increase in household debt. A potential concern for policy makers is how these high debt levels will affect household consumption were the economy to experience a sudden shock, in form of higher unemployment, rising interest rates, falling house prices or a combination of the three. This memo provides an overview of the theoretical implications and the empirical literature on the effects of such shocks on consumption, with an emphasis on heterogeneous responses. We use Norwegian register data on income and wealth to impute measures of consumption for the population and explore differences in consumption rates to gauge the potential impact of such shocks in Norway. We study the role of debt for consumption and find support for the hypothesis that consumption expenditure growth is lower among households with high debt. Much of the leveling off in consumption growth after the crisis reflects a regular response by highly indebted households. Still, a somewhat stronger relationship after the crisis shows that precautionary savings may have played a role.
Debt and household consumption responses, with Andreas Fagereng, Norges Bank Staff Memo 1/2016