Work

Heterogeneity and macroeconomic state dependence in the spending response to stimulus

Year: 2024

Type: article

Abstract: We explore how households’ stimulus spending varies by income under different macroeconomic conditions over 2020–2021. We document a shift in the spending distribution from a declining pattern with a high average spending response to a U-shaped one with weaker responses and spending rising with income over much of the distribution. We argue that during crisis times like 2020, binding liquidity constraints render poorer households anxious to consume, while in more normalized economies (2021), they prioritize saving or servicing debts.

Source: Economics Letters

DOI: 10.1016/j.econlet.2024.112117

Authors: Woongchan Jeon, Kieran James Walsh

Institution: ETH Zurich

Language: English

Topic: COVID-19 Pandemic Impacts

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: No poverty

Open Access status: hybrid

Estimated APC paid: $2,980