Five facts about MPCs: evidence from a randomized experiment

Johannes Boehm, Étienne Fize and Xavier Jaravel

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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 G00 I38 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2025-01-31
New Economics Papers: this item is included in nep-exp
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Published in American Economic Review, 31, January, 2025, 115(1), pp. 1 - 42. ISSN: 0002-8282

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http://eprints.lse.ac.uk/126550/ Open access version. (application/pdf)

Related works:
Journal Article: 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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