Cornell University

The S. C. Tsiang Macroeconomics Workshop: Arlene Wong

Thursday, October 26, 2017 at 11:40am to 1:10pm

Uris Hall, 498
Central Campus

Arlene Wong
Princeton University

PDF icon Trading Down and the Business Cycle (joint w/Nir Jaimovich & Sergio Rebelo)

We document two facts. First, during the Great Recession, consumers traded down in the quality of the goods and services they consumed. Second, the production of low-quality goods is less labor intensive than that of high-quality goods.  When households traded down, labor demand fell, increasing the severity of the recession. We find that the trading-down phenomenon accounts for a substantial fraction of the fall in U.S. employment in the recent recession. We show that embedding quality choice in a business-cycle model improves the model's amplification and comovement properties.

Event Type

Class/ Workshop




EconMacro, EconSeminar, Ecomomics



Contact E-Mail

Contact Name

Amy Moesch

Contact Phone



Arlene Wong

Speaker Affiliation

Princeton University

Open To

Cornell Economics Community (List Serve Members)

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