The Marginal Propensity to Consume During the COVID-19 Pandemic: Evidence from Thailand and Vietnam
Dzung Bui (),
Lena Draeger (),
Bernd Hayo and
Giang Nghiem ()
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Dzung Bui: University of Marburg
Lena Draeger: Leibniz University of Hannover
Giang Nghiem: Leibniz University of Hannover
Authors registered in the RePEc Author Service: Lena Dräger ()
MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)
In evaluating surveys conducted in Thailand and Vietnam during the COVID-19 pandemic, we find that the marginal propensity to consume is significantly larger for positive than for negative income shocks. This result contradicts a prediction from the lifecycle permanent income model with borrowing constraints as well as empirical evidence from industrialized countries. However, our finding is consistent with Kahneman and Tverskyâ€™s prospect theory, according to which the combination of income uncertainty and loss aversion can induce households to react more strongly to positive than to negative shocks.
Keywords: Marginal propensity to consume (MPC); Unanticipated income shocks; COVID-19; Thailand; Vietnam. (search for similar items in EconPapers)
JEL-codes: D12 D83 E62 E71 H31 (search for similar items in EconPapers)
Pages: 08 pages
New Economics Papers: this item is included in nep-mac, nep-ore and nep-sea
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Working Paper: The Marginal Propensity to Consume During the COVID-19 Pandemic: Evidence from Thailand and Vietnam (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:202207
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