How economic crises affect inflation beliefs: Evidence from the Covid-19 pandemic.

This paper studies how inflation beliefs reported in the New York Fed's Survey of Consumer Expectations have evolved over the first six months of the Covid-19 pandemic. We find that household inflation expectations responded slowly and mostly at the short-term horizon. In contrast, the data reveal immediate and unprecedented increases in individual inflation uncertainty and in inflation disagreement across respondents. Consistent with precautionary saving, the rise in inflation uncertainty is shown to be associated with how respondents used the stimulus checks they received as part of the 2020 CARES Act. We also find evidence of a strong polarization in inflation beliefs and we identify differences across demographic groups.

Maternal Employment, Migration, and Child Development.

We analyze the roles of and interrelationships among school inputs and parental inputs in affecting child development through the specification and estimation of a behavioral model of household migration and maternal employment decisions. We integrate information on these decisions with observations on child outcomes over a 13-year period from the NLSY. We find that the impact of our school quality measures diminish by factors of 2 to 4 after accounting for the fact that families may choose where to live in part based on school characteristics and labor market opportunities. The positive statistical relationship between child outcomes and maternal employment reverses sign and remains statistically significant after controlling for its possible endogeneity. Our estimates imply that when parental responses are taken into account, policy changes in school quality end up having only minor impacts on child test scores.

Social Security and the Retirement and Savings Behavior of Low Income Households.

In this paper, we develop and estimate a model of retirement and savings incorporating limited borrowing, stochastic wage offers, health status and survival, social security benefits, Medicare and employer provided health insurance coverage, and intentional bequests. The model is estimated on sample of relatively poor households from the first three waves of the Health and Retirement Study (HRS), for whom we would expect social security income to be of particular importance. The estimated model is used to simulate the responses to changes in social security rules, including changes in benefit levels, in the payroll tax, in the social security earnings tax and in early and normal retirement ages. Welfare and budget consequences are estimated.