Racial Heterogeneity in Consumption Responses to the Economic Impact Payment

Yulina Goto and Makoto Nakajima ()

No 26-06, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: We investigate how the consumption responses to the Economic Impact Payment during the pandemic (commonly known as the pandemic stimulus check) differed across racial groups, and what accounts for the differences. If only family size and age are controlled, as in the baseline regression of Parker et al. (2022), in addition to race, Black and Hispanic households exhibit a higher marginal propensity to consume (MPC, preferred estimate being 0.29) than Whites (0.16) in response to monetary transfers under the Economic Impact Payment. This racial heterogeneity is accounted for by differences in liquid wealth holdings

Keywords: MPC; consumption; stimulus payment; economic impact payment; permanent income hypothesis; liquidity constraint; hand-to-mouth; fiscal policy (search for similar items in EconPapers)
JEL-codes: E21 E62 H31 J15 (search for similar items in EconPapers)
Pages: 36
Date: 2026-01-29
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedpwp:102352

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DOI: 10.21799/frbp.wp.2026.06

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