The Trickling Up of Excess Savings

Adrien Auclert, Matthew Rognlie and Ludwig Straub

No 30900, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We provide a simple framework connecting the distribution of excess savings across households to the dynamics of aggregate demand. Deficit-financed fiscal transfers generate excess savings. The poorest households with the highest MPCs spend down their excess savings the fastest, increasing other households’ incomes and their excess savings. This leads to a long-lasting increase in aggregate demand until, ultimately, excess savings have “trickled up” to the richest savers with the lowest MPCs, raising wealth inequality.

JEL-codes: E21 E62 (search for similar items in EconPapers)
Date: 2023-01
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Published as Adrien Auclert & Matthew Rognlie & Ludwig Straub, 2023. "The Trickling Up of Excess Savings," AEA Papers and Proceedings, vol 113, pages 70-75.

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Journal Article: The Trickling Up of Excess Savings (2023)
Working Paper: The Trickling Up of Excess Savings (2023)
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