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Impact of Cash Transfers on Consumption during the COVID-19 Pandemic: Evidence from Japanese Special Cash Payments

Takahiro Hattori, Norihiro Komura and Takashi Unayama ()

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: We estimate the marginal propensity to consume (MPC) out of the Special Cash Payment conducted in Japan during the COVID-19 pandemic. The MPC is identified by exploiting differences in the timing of the payment among cities using publicly available data from the Family Income and Expenditure Survey. The estimated MPC is approximately 10 percent, which does not differ from those estimated in previous studies conducted during the non-pandemic period. We also estimate the different MPCs by consumption subcategories defined based on the infection risk, finding that households did not increase spending on "face-to-face services" while "goods/services purchased at home" and "goods/services purchased at stores" increased.

Pages: 19 pages
Date: 2021-06
New Economics Papers: this item is included in nep-hea
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