Measuring the US marginal propensity to consume

Samih Azar ()
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Samih Azar: Haigazian University

Economics Bulletin, 2021, vol. 41, issue 2, 283-292

Abstract: The marginal propensity to consume (MPC) is a crucial variable in macroeconomics, and is critical for calculating the income effects of a given fiscal policy stance. This paper computes for the US three degrees of MPC: immediate, or instantaneous, intermediate, or after a lag of one year, and long term, at the steady-state. All three are statistically significant and they sway gradually from lowest to highest. Although the evidence on co-integration between actual income and actual consumption is weak, the Error-Correction Model and a bootstrapping procedure permit a very strong reversal of the evidence.

Keywords: marginal propensity to consume; macroeconomics; disposable income; consumption; co-integration; bootstrapping; United States (search for similar items in EconPapers)
JEL-codes: E2 (search for similar items in EconPapers)
Date: 2021-04-09
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