Heterogeneity and Macroeconomic State Dependence in the Spending Response to Stimulus

13 Pages Posted: 9 May 2023 Last revised: 22 Apr 2024

See all articles by Woongchan Jeon

Woongchan Jeon

ETH Zürich

Kieran James Walsh

ETH Zürich - KOF Swiss Economic Institute

Date Written: April 2024

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 to a U-shaped one. We argue that during crisis times like 2020, binding liquidity constraints render low-income households anxious to consume, while in more normalized economies (2021), they prioritize saving or servicing debts.

Keywords: Marginal Propensity to Consume, Stimulus Payments

JEL Classification: D12, H31, G51

Suggested Citation

Jeon, Woongchan and Walsh, Kieran James, Heterogeneity and Macroeconomic State Dependence in the Spending Response to Stimulus (April 2024). Available at SSRN: https://ssrn.com/abstract=4441137 or http://dx.doi.org/10.2139/ssrn.4441137

Woongchan Jeon

ETH Zürich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41446324878 (Phone)

HOME PAGE: http://woongchanjeon.com

Kieran James Walsh (Contact Author)

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
37
Abstract Views
268
PlumX Metrics