Reported MPC and Unobserved Heterogeneity

Luigi Pistaferri
Authors registered in the RePEc Author Service: Tullio Jappelli ()

No 14083, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Panel data on reported marginal propensity to consume (MPC) in the 2010 and 2016 Italy’s Survey of Household Income and Wealth uncover a strong negative relationship between cash-on-hand and MPC. Even though the relationship is attenuated when using regression methods that control for unobserved heterogeneity, the amount of bias is moderate. MPC estimates are used to evaluate the effectiveness of revenue-neutral fiscal policies targeting different parts of the distribution of household resources.

Keywords: Transitory income shocks; Marginal propensity to consume; Panel data (search for similar items in EconPapers)
JEL-codes: D12 D14 E21 (search for similar items in EconPapers)
Date: 2019-10
New Economics Papers: this item is included in nep-mac and nep-ore
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Related works:
Journal Article: Reported MPC and Unobserved Heterogeneity (2020)
Working Paper: Reported MPC and Unobserved Heterogeneity (2018)
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