The Consumption Response to Liquidity-Enhancing Transfers: Evidence from Italian Earthquakes
Year: 2015
Type: preprint
Study design: Observational Study
Abstract: Exploiting three Italian earthquakes as quasi-experiments, we analyze the response of homeowners' consumption to targeted transfers, financing housing reconstruction over time. Like loans, these transfers mainly affect the liquidity of households' wealth in the short run: we show that they have no effect on consumption over a multi-year horizon. Yet, the access to reconstruction funds has significantly heterogeneous effects on impact: it strongly raises non-durable consumption by households with low liquidity and bank debt (the 'wealthy-hand-to-mouth'); it makes no difference for liquid households. Consistently, in either group, consumption is insensitive to transfer funds that accrue directly to firms.
DOI: 10.17863/cam.5769
Authors: Acconcia, A., Corsetti, G., Simonelli, S.
Institutions: University of Naples Federico II, University of Cambridge
Language: English
Subfield: Transportation
Field: Social Sciences
Domain: Social Sciences
SDG: No poverty
Open Access status: green
OpenAlex ID: W1942582002