MPCs in an economic crisis: spending, saving and private transfers

Thomas Crossley (), Paul Fisher, Peter Levell and Hamish Low

No W21/26, IFS Working Papers from Institute for Fiscal Studies

Abstract: MPCs were directly elicited from a representative sample of UK adults in July 2020 using receipt of a hypothetical unanticipated, one-time income payment. Reported MPCs are modest, around 11% on average. They are higher, but still modest, for individuals in households with high current needs. These low MPCs may be a consequence of the prevailing economic uncertainty. Signi?cant fractions of respondents report they would use a windfall to pay down debt, or that they would change their transfer payments to or from family and friends. The latter means that the aggregate MPC out of a stimulus payment need not equal the population-average MPC.

Date: 2021-08-23
New Economics Papers: this item is included in nep-his
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