The Distribution of Wealth and the MPC: Implications of New European Data

Christopher Carroll, Jiri Slacalek and Kiichi Tokuoka ()

American Economic Review, 2014, vol. 104, issue 5, 107-11

Abstract: Using a standard, realistically calibrated model of buffer-stock saving with transitory and permanent income shocks, we study how cross-country differences in the wealth distribution and household income dynamics affect the marginal propensity to consume out of transitory shocks (MPC). Across the 15 countries in our sample, we find that the aggregate consumption response ranges between 0.1 and 0.4 and is stronger (i) in economies with large wealth inequality, where a larger proportion of households has little wealth, (ii) under larger transitory income shocks, and (iii) when we consider households only use liquid assets (rather than net wealth) to smooth consumption.

JEL-codes: D31 E21 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.5.107
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (77)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.5.107 (application/pdf)
http://www.aeaweb.org/aer/app/10405/P2014_1087_app.pdf (application/pdf)
http://www.aeaweb.org/aer/data/10405/P2014_1087_data.zip (application/zip)
http://www.aeaweb.org/aer/ds/10405/P2014_1087_ds.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: The Distribution of wealth and the MPC: implications of new European data (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:104:y:2014:i:5:p:107-11

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().