We develop a model of consumer choice with dynamic pricing and valuation uncertainty, and allow for purchase delay. Simulating the model, we find that delay is less likely when the expected increase in price is relatively large, even with high uncertainty. Using novel data that include information on trip characteristics, passenger demographics, fares, and timing of purchases from the Survey of International Air Travelers, we document delay patterns and price heterogeneity in the airline industry. We then perform a series of empirical tests to study selection into an arrival date, the propensity to delay, and the consequences of delay. Although trip and passenger characteristics drive much of the arrival behavior, the evolution of prices plays a role in the choice to delay. Consistent with our model, consumers in flight segments with relatively steep price paths are less likely to delay. Finally, controlling for trip and passenger characteristics and the purchase period, passengers who delay pay slightly more on average, though this effect disappears if we consider longer delay periods. This may suggest that consumers are willing to delay and pay more in order to reduce their uncertainty, but that they are unwilling to delay long periods of time if prices continue to increase. 

Abstract: This paper constructs Currency Equivalent (CE) monetary aggregates for the United States from component asset data and compares them with simple sum measures using quarterly data from 1967:1 to 2024:1. We examine whether monetary aggregates retain empirical content when they account for differences in the liquidity services provided by assets. We study long-run money demand, the predictive content of monetary aggregates for nominal income and prices, and the role of money in backward-looking IS equations. The results show that the empirical role of money depends on the aggregation method. The simple sum aggregates do not support a stable long-run money demand relationship. The evidence is more favorable for the CE measures, but it varies across aggregates and recursive sample windows. For the CE measures that support a long-run relationship, estimated income elasticities are close to unity. CE aggregates also contain predictive information for nominal income and prices, with results that vary across policy regimes. The IS estimates show that real money growth helps explain the output gap after controlling for lagged output and the real interest rate. Overall, the results suggest that money appears less redundant when monetary assets are aggregated in a way that accounts for their liquidity services.

Abstract: The 2022 U.S. yield-curve inversion was the deepest in more than four decades, yet the recession many expected had not occurred by January 2025. We examine whether credit and equity conditions help explain why a recession did not follow. During the inversion, credit stress remained low and equity valuations stayed far from their financial-crisis levels. We use a structural Bayesian Vector Autoregression with traditional and narrative sign restrictions to distinguish policy-expectations shocks from financial-stress shocks. We find a persistent decline in industrial production after a financial-stress shock, but no clear evidence of a persistent decline after a policy-expectations shock or a term-spread shock identified separately from the policy rate. Finally, we construct conditional forecasts in which we hold the observed 2022-2024 paths of the federal funds rate and term spread fixed and replace the credit and equity paths with those from 2008-2010. After three years, forecast industrial production is about 18 percent lower under the crisis paths than under the observed paths. These findings suggest that forecasters should assess credit and equity conditions alongside the yield curve when evaluating recession risk.