The Sentimental Propagation of Lottery Winnings: Evidence from the Spanish Christmas Lottery

Morteza Ghomi, Micó-Millán, Isabel and Evi Pappa
Authors registered in the RePEc Author Service: Isabel Micó-Millán

No 17173, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We leverage a unique natural experiment, the Spanish Christmas lottery, to investigate the impact of highly geographically clustered winnings on macroeconomic aggregates, and on sentiment and durable consumption, using survey evidence. Lottery winnings induce significant demand effects, especially during recessions, reducing unemployment and increasing job creation and CPI prices. Albeit not receiving wins, households in winning provinces become more optimistic on impact and significantly increase their durable consumption (for furniture and vehicles) six months after the shock. We propose this lottery as an unconventional fiscal policy tool for increasing aggregate revenues and stimulating local demand without crowding out aggregate activity.

Keywords: Randomized natural experiment; Transitory income shocks; Sentiment and consumption responses (search for similar items in EconPapers)
JEL-codes: D12 E21 E32 E62 (search for similar items in EconPapers)
Date: 2022-04
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Related works:
Journal Article: The sentimental propagation of lottery winnings: Evidence from the Spanish Christmas lottery (2024)
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