Use of the most recent government stimulus varied by income, with richer households saving the money and poorer ones using it to pay off debt. At the same time, the supply of consumer credit available to low-income households has declined.
These developments mark a shift in patterns of American credit consumption. Examining consumer credit in the 20th century, GUNNAR TRUMBULL's 2014 book considers the comparative trajectory of France and the United States and focuses on the role of policy coalitions in prioritizing consumer protection and credit access in each case.
From the article:
"In the immediate wake of World War II, as credit-driven consumption boomed in the United States, French families faced credit rationing. In 1949, consumer credit represented 10% of GDP in the US, but just 0.2% of GDP in France. Even as rationing was relaxed, French consumer lending remained low. The account in this book attributes the emergence and divergence of U.S. and French consumer credit to the ways in which the sector was transformed into a legitimate economic activity. At the beginning of the 20th century, societal attitudes toward credit in both France and the United States were mainly negative. By the end of the twentieth century, the popular perception of lending in the two countries had been remade.
In the United States, the supply of consumer credit was supported by an evolving coalition between progressive activists and consumer lenders. The groundwork for abundant consumer credit was laid in the 1910s and 1920s, when credit access was supported by progressives as a salve to the emerging working class, and by powerful industrialists as an alternative to expansive welfare of the kind that was spreading in Europe. In the 1950s and 1960s, consumer credit became an element of the postwar productivity coalition, in which organized labor supported credit to the working class and manufacturers encouraged credit to drive new demand. By the 1970s, credit market access became a consensus issue of women's and welfare rights campaigns. These groups reconceived credit access as a right of citizenship and a means to economic equality."
Link to the text.
- "This article explores distinctive features of the credit transaction that differentiate claims making in the credit market from more familiar forms of claims making in the labor market." Greta Krippner analyzes "Ownership and the Politics of Credit Access in Late Twentieth-Century America." Link.
- Sarah Quinn on budgets, fiscal policies, and financial engineering: "A 1960s political battle between the federal government and the Johnson administration over asset sales and the budget culminated in a reorganization of U.S. housing finance policy." Link.
- "In the absence of a more elaborate, cradle-to-grave social welfare system, Americans saw a greater need to set aside funds for these life events and risks. In contrast to West Germans, American consumers did not view saving for consumer goods as an attractive alternative to obtaining them through consumer debt." Jan Logemann examines welfare policy and credit consumption. Link.
India's Rice Exports
Assistant Professor at the Delhi School of Economics Manish Kumar studies agricultural and commodity markets in India. In a 2019 paper, he examines how India's rice exports have affected different classes of farmers.
From the paper:
"This article provides an empirical study of the economic impacts of rice exports on the actors involved in Paddy Value Networks (PVN) in India. The significance of rice production in India is clear when considering that India’s rice exports command the highest share in the country’s total agricultural exports; and that paddy cultivation involves almost half of India’s agricultural households. The export of rice thus connects the masses with the world market. The maximum number of the paddy farmers in India are selling paddy at a price which is less than the cost of production. In 2012–2013, 83 per cent of the total paddy cultivators in India received a price less than the minimum support price; in this way as well, the small and marginal farmers are more deprived than the larger-sized group of farmers. The export unit price of rice is less than its economic cost. In a situation where the farming community is already facing the deficit and not able to cover the cost of production, the recent export prices are an additional concern. Since an exporter of any country cannot alone change the world price, it means that in order to make exports profitable, even with a lower margin, the squeeze is possible only in the backward linkages in general, and from farmers in particular."
Link to the paper.
Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: firstname.lastname@example.org.
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- Join us on Thursday, May 20 at 10 am ET for a panel discussion in investment and decarbonization, featuring Anusar Farooqui, Yakov Feygin, Daniela Gabor, Robert Hockett, JW Mason, Saule Omarova, Tim Sahay, and Adam Tooze. Register here.
- "We can be virtually certain that, were green ratings left to 'independent' ratings agencies or financial intermediaries, they would become decoupled from fundamentals as the green boom gets underway." A new a piece by Farooqui and Sahay that explores funding and implementation of green projects, and proposes the creation of a public ratings agency for green finance. Link.
- A new report co-authored by JFI Fellow Patrick Robbins, alongside Johanna Bozuwa, Thea Riofrancos, Sarah Knuth and more, on a vision for the New York Power Authority's role in decarbonizing New York's energy system. Link.
- On the links between Chinese investment projects and increased protest in Africa, by Francesco Iacoella, Bruno Martorano, Laura Metzger, and Marco Sanfilippo. Link.
- Quinn Slobodian on the sovereign debt crisis and risk ranking poorer nations in the 1970s. Link. (ht: Paul]
- "Whatever the cause of the April slowdown in job growth—one that could easily prove to be statistical noise—it is unlikely that the extra federal benefits are the primary explanation." Skanda Amarnath in the Times on the jobs numbers. Link.
- "We demonstrate that existing government institutions and policy established for reasons unrelated to climate change may induce climate adaptation." By Antonio Bento, Noah S. Miller, Mehreen Mookerjee, and Edson R. Severnini. Link.
- "Aggregate indicators are informative only to the extent that the importance of the underlying components are constant over time." Matt Klein in Barron's on why the apparent inflation surge in April actually reflects idiosyncrasies in reopening. Link.
- "Strategic interaction has transformed the old Fordist dual industrial structure into a tripartite structure composed of high profit volume firms with monopolies based on intellectual property rights (IPRs), physical capital-intensive firms protected by an investment barrier to entry, and low profit volume labor-intensive firms." Herman Mark Schwartz on global stagnation and intellectual property. Link.
- Lorenz T. Keyßer and Manfred Lenzen on how to achieve a 1.5°C climate target through different degrowth scenarios. Link.
- Michael Witter on Covid-19's threat to the Caribbean. Link.
- "Fuelwood was the main domestic fuel in the Mediterranean Basin during the early modern age, although the consumption level was lower than in other latitudes. The calculation of annual real prices and per capita household consumption figures in Seville from 1518 to 1775 reveals a complex evolution connected to a European-wide scenario. Contrary to prior assumptions, a substantial increase in domestic fuelwood use is evidenced as of 1630. The growing supply of firewood from tree-crops, leading to a decrease in real prices, ran parallel to an early diet shift to pulses and the corresponding extension of cooking times." By Isabel Bartolomé Rodríguez and Manuel González-Mariscal. Link.