MPCs through COVID: Spending, Saving and Private Transfers

18 Pages Posted: 27 Oct 2020

See all articles by Thomas F. Crossley

Thomas F. Crossley

European University Institute - Economics Department (ECO); Institute for Fiscal Studies

Paul Fisher

University of Essex

Peter Levell

Institute for Fiscal Studies (IFS)

Hamish Low

Institute for Fiscal Studies (IFS); University of Oxford

Date Written: October 20, 2020

Abstract

MPCs were directly elicited from a representative sample of UK adults in July 2020. Reported MPCs are low, around 11% on average. They are higher, but still modest, for individuals in households with high current needs. These low MPCs may be a consequence of the prevailing economic uncertainty. Some respondents report that they would respond to a one-time income payment by transferring more to friends and family, others report they would see a decline in the payments received. Targeting payments to high-MPC individuals could be partly undone. Further, the aggregate MPC out of a stimulus payment need not equal the population-average MPC, even if all individuals receive the same payment.

Keywords: COVID-19, spending, MPC, crowding out

JEL Classification: D12, D14, E21

Suggested Citation

Crossley, Thomas F. and Fisher, Paul and Levell, Peter and Low, Hamish and Low, Hamish, MPCs through COVID: Spending, Saving and Private Transfers (October 20, 2020). Available at SSRN: https://ssrn.com/abstract=3715363 or http://dx.doi.org/10.2139/ssrn.3715363

Thomas F. Crossley

European University Institute - Economics Department (ECO) ( email )

Villa San Paolo
Via della Piazzuola 43
50133 Florence
Italy

Institute for Fiscal Studies ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Paul Fisher (Contact Author)

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Peter Levell

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Hamish Low

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

University of Oxford ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

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