How Did U.S. Consumers Use Their Stimulus Payments?

Coibion, Olivier; Gorodnichenko, Yuriy; Weber, M.

doi:10.2139/ssrn.3673943

Cited by 17 publications

(34 citation statements)

References 14 publications

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“…Then U C 1 (w) satisfies the following Bell-2 As shown in Figure 1, replacement rates are highest for low wage workers. Evidence that low wage workers' consumption responses to benefits have been consistent with hand-to-mouth behavior is provided by Chetty, Friedman, Hendren, Stepner, and Team (2020); Cox, Ganong, Noel, Vavra, Wong, Farrell, and Greig (2020); and Coibion, Gorodnichenko, and Weber (2020). man equation:…”

Section: Bellman Equationsmentioning

confidence: 96%

Dynamic Trade-offs and Labor Supply Under the CARES Act

Boar¹,

Mongey²

2020

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The CARES Act resulted in many unemployed workers receiving benefits that exceeded wages at their previous job. Given this, would an unemployed worker reject an offer to return to their former job at the same wage? Qualitatively, we provide a very simple dynamic model that incorporates four reasons the answer could be 'no': (i) the temporary nature of the CARES Act, (ii) uncertainty that their return-to-work offer might expire, (iii) search frictions, and (iv) wage losses out of unemployment in a recession. Quantitatively, when evaluated under empirically relevant parameters, we find it unlikely a worker would reject an offer to return to work at the same wage. We show special cases where this is not true and relate these to anecdotal evidence.

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Section: Bellman Equationsmentioning

confidence: 96%

Dynamic Trade-offs and Labor Supply Under the CARES Act

Boar¹,

Mongey²

2020

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“…Second, our paper differs from much of the MPC literature in that we estimate MPCs in a time of a severe crisis, when MPCs may be different and when fiscal stimulus packages are most likely to be deployed. The crucial difference between our paper and the two others that measured MPCs in 2020 (Baker et al (2020) and Coibion et al (2020)) is that those two papers evaluate MPCs out of stimulus checks distributed during the first wave of infection when there were many restrictions on spending. In contrast, our data (Wave 4 of the Understanding Society COVID-19 study) were collected after the first wave of the pandemic, during a period when the UK had come out of lock down and many social-distancing, travel and commercial restrictions had been lifted.…”

Section: Introductionmentioning

confidence: 92%

“…They find that each $1 received resulted in increases in spending of 0.25 cents when their sample is weighted using the Current Population Survey. Coibion et al (2020) use direct elicitation and find that only 15% respondents "mostly spent" their stimulus cheques. These estimated average MPCs are low compared to the average MPCs from the literature cited above, which are typically around 0.3-0.5.…”

Section: Introductionmentioning

confidence: 99%

MPCs through COVID: spending, saving and private transfers

Crossley¹,

Fisher²,

Levell³

et al. 2021

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MPCs were directly elicited from a representative sample of UK adults in July 2020 using receipt of a hypothetical unanticipated, one-time income payment. Reported MPCs are low, around 11% on average. They are higher, but still modest, for individuals in households with high current needs. These low MPCs may be a consequence of the prevailing economic uncertainty. Further, the fraction of respondents that report they would change their transfer payments to or from family and friends is almost as large as the fraction that report they would increase their spending. This means that targeting direct fiscal stimulus payments to high-MPC individuals could be partly undone, and that the aggregate MPC out of a stimulus payment need not equal the population-average MPC.

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“…Armantier et al (2020) report that households used about 30 percent of the stimulus payments to increase consumption and split the remainder between paying down debt and other forms of savings. Moreover, Baker et al (2020c) and Coibion, Gorodnichenko, and Weber (2020b) find that especially poorer households used the stimulus payments to pay off debt.…”

Section: E Transactions Versus Balances For High and Low Fico Borrowersmentioning

confidence: 99%

The COVID-19 Shock and Consumer Credit: Evidence from Credit Card Data

2020

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We use credit card data from the Federal Reserve Board's FR Y-14M reports to study the impact of the COVID-19 shock on the use and availability of consumer credit across borrower types from March through August 2020. We document an initial sharp decrease in credit card transactions and outstanding balances in March and April. While spending starts to recover by May, especially for risky borrowers, balances remain depressed overall. We find a strong negative impact of local pandemic severity on credit use, which becomes smaller over time, consistent with pandemic fatigue. Restrictive public health interventions also negatively affect credit use, but the pandemic itself is the main driver. We further document a large reduction in credit card originations, especially to risky borrowers. Consistent with a tightening of credit supply and a flight-to-safety response of banks, we find an increase in interest rates of newly issued credit cards to less creditworthy borrowers.

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How Did U.S. Consumers Use Their Stimulus Payments?

Cited by 17 publications

References 14 publications

Dynamic Trade-offs and Labor Supply Under the CARES Act

Dynamic Trade-offs and Labor Supply Under the CARES Act

MPCs through COVID: spending, saving and private transfers

The COVID-19 Shock and Consumer Credit: Evidence from Credit Card Data

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