Five Facts about MPCs: Evidence from a Randomized Experiment

Johannes Boehm, Etienne Fize and Xavier Jaravel

American Economic Review, 2025, vol. 115, issue 1, 1-42

Abstract: We present five facts from an experiment on the marginal propensity to consume (MPC) out of transitory transfers: (1) the one-month MPC on a cash-like transfer is 23 percent; (2) it is substantially higher (61 percent) on a transfer administered via a card where remaining funds expire after three weeks, inconsistent with money fungibility; (3) the consumption response is concentrated in the first three weeks; (4) MPCs vary with household characteristics but are high even for the liquid wealthy; (5) unconditional MPC distribution exhibits large variation. Our findings inform the design of stimulus policies and pose challenges to existing macroeconomic models.

JEL-codes: D12 D91 E21 G51 I38 (search for similar items in EconPapers)
Date: 2025
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Five facts about MPCs: evidence from a randomized experiment (2025)
Working Paper: Five facts about MPCs: Evidence from a randomized experiment (2024)
Working Paper: Five facts about MPCs: evidence from a randomized experiment (2024)
Working Paper: Five Facts about MPCs: Evidence from a Randomized Experiment (2023)
Working Paper: Five Facts about MPCs: Evidence from a Randomized Experiment (2023)
Working Paper: Five Facts about MPCs: Evidence from a Randomized Experiment (2023)
Working Paper: Five Facts about MPCs: Evidence from a Randomized Experiment (2023)
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DOI: 10.1257/aer.20240138

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