Author: Young Jun Choi(Bank of Korea)

 This paper examines which specific generation contributed to the pro-cyclicality of household consumption during the contraction phase following the Global Financial Crisis. Analyzing generation-specific household consumption is crucial because certain generations may inadvertently experience negative effects during business cycle fluctuations, as policies and other factors can affect all generations uniformly. The findings indicate that the pro-cyclicality of household consumption is primarily driven by a decline in spending among the MZ and pre-Baby Boom generations. These results suggest an increased likelihood of household consumption pro-cyclicality in future contraction phases. This is attributed to the potential decrease in income for the emerging dominant generation of consumer, the MZ generation, during contraction phases. As a result, there is a probability of household consumption slowdown, especially in selective consumer goods, leading to the pro-cyclicality of household consumption.