Fiscal Policy and MPC Heterogeneity

Jappelli, Tullio; Pistaferri, Luigi

doi:10.1257/mac.6.4.107

Cited by 252 publications

(226 citation statements)

References 35 publications

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“…Our model also features substantial heterogeneity in MPCs: some households can spend as high as 55 cents out of every new dollar earned. Similar to the evidence provided by Jappelli and Pistaferri (2014), it is the households with low asset holdings or negative net worth that feature these high MPCs.…”

Section: Steady-state Resultssupporting

confidence: 64%

Regional Consumption Responses and the Aggregate Fiscal Multiplier

Dupor¹,

Karabarbounis²,

Kudlyak³

et al. 2021

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We use regional variation in the American Recovery and Reinvestment Act (2009-2012) to analyze the effect of government spending on consumer spending. Our consumption data come from household-level retail purchases in Nielsen and auto purchases from Equifax credit balances. We estimate that a $1 increase in county-level government spending increases consumer spending by $0.18. We translate the regional consumption responses to an aggregate fiscal multiplier using a multi-region, New Keynesian model with heterogeneous agents and incomplete markets. Our model successfully generates the estimated positive local multiplier, a result that distinguishes our incomplete markets model from models with complete markets. The aggregate consumption multiplier is 0.4, which implies an output multiplier higher than one. The aggregate consumption multiplier is almost twice the local estimate because trade linkages propagate government spending across regions.

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Section: Steady-state Resultssupporting

confidence: 64%

Regional Consumption Responses and the Aggregate Fiscal Multiplier

Dupor¹,

Karabarbounis²,

Kudlyak³

et al. 2021

View full text Add to dashboard Cite

show abstract

“…This is in contrast to Jappelli and Pistaferri (2012), who directly ask respondents to state the fraction of the additional budget that is spent. We opted for the qualitative approach because we think it is more robust with respect to measurement error in the respondents' replies.…”

Section: Consumption Responses To Tax Changes In Our Survey and In Thmentioning

confidence: 99%

“…Based on the timing of the 2001 income tax rebate, Johnson et al (2006) estimate that households spent between 20 and 40 per cent of the tax rebate within the first three months after implementation of the tax change. Jappelli and Pistaferri (2012) estimate an average marginal propensity to consume of 0.48 for transitory changes in income. Hence, in comparison to estimates from other microeconomic studies, our estimate for the marginal propensity to consume is at the upper end of the distribution.…”

Section: Consumption Responses To Tax Changes In Our Survey and In Thmentioning

confidence: 99%

“…Coronado et al (2005) investigate selfreported consumption responses to the child credit rebate and the change in withholding taxes enacted in 2003 and conclude that around 21-24 per cent of households spent the additional income. Jappelli and Pistaferri (2012) use the 2010 Italian survey of household income and wealth to study how much of an unexpected transitory income change respondents would consume and find that, on average, consumers spent 48 per cent of the additional funds.…”

Section: Introductionmentioning

confidence: 99%

“…Although the use of survey methods in economic research is increasing (Blinder and Krueger, 2004;Shapiro and Slemrod, 2009;Jappelli and Pistaferri, 2012;Hayo and Neuenkirch, 2013;Hayo and Neumeier, 2013; among others), they are still used relatively seldom. One general concern with using survey methods in economics is measurement error.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Taxation and Consumption: Evidence from a Representative Survey of the German Population

Hayo

Uhl

2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Taxation and Consumption:Evidence from a Representative Survey of the German PopulationAbstract Using a representative survey of the German population, this paper studies individual consumption responses to a recent payroll tax reduction. Our results show that 55% of the respondents spend the extra money, indicating considerable potential for tax changes to affect consumption and economic activity. Our analysis of the socio-demographic and economic determinants of consumption responses suggests that temporary and permanent tax changes have a similar impact, that interest rates are an important determinant of consumption responses to tax changes, and that households with higher income have a higher propensity to consume.

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Consumption and credit constraints: a model and evidence from Ireland

Gerlach-Kristen

Merola

2018

Empir Econ

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Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.

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Fiscal Policy and MPC Heterogeneity

Cited by 252 publications

References 35 publications

Regional Consumption Responses and the Aggregate Fiscal Multiplier

Regional Consumption Responses and the Aggregate Fiscal Multiplier

Taxation and Consumption: Evidence from a Representative Survey of the German Population

Consumption and credit constraints: a model and evidence from Ireland

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