A Model of the Consumption Response to Fiscal Stimulus Payments

Gianluca Violante and Greg Kaplan
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Gianluca Violante: NYU

No 243, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: Preliminary results show that when this model is parameterized to match a number of targets - in particular the joint cross-sectional distribution of liquid and illiquid wealth - it is able to generate responses to fiscal stimulus payments of the observed order of magnitude. The model is also consistent with two other important facts documented in the empirical literature: 1) household consumption does not respond significantly to large anticipated income changes, and 2) the estimated consumption responses to tax rebates appear to be the result of very high marginal propensities to consume for a minority of households (around 1/4).

Date: 2011
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Related works:
Journal Article: A Model of the Consumption Response to Fiscal Stimulus Payments (2014)
Working Paper: A Model of the Consumption Response to Fiscal Stimulus Payments (2011)
Working Paper: A Model of the Consumption Response to Fiscal Stimulus Payments (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:243

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