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Fiscal multipliers, monetary efficacy, and hand-to-mouth households

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  • Guo, Fei
  • Kit-Ming Yan, Isabel
  • Chen, Tao
  • Hu, Chun-Tien

Abstract

The effectiveness of fiscal and monetary policy has been found to exhibit large heterogeneity across countries, and it hinges heavily on households’ marginal propensity to consume (MPC) in response to the policy shocks. This paper examines the role of households’ liquidity, saving, and credit constraints as microfactors that underpin households’ MPC and hence affect the macro level fiscal and monetary policy effectiveness.

Suggested Citation

  • Guo, Fei & Kit-Ming Yan, Isabel & Chen, Tao & Hu, Chun-Tien, 2023. "Fiscal multipliers, monetary efficacy, and hand-to-mouth households," Journal of International Money and Finance, Elsevier, vol. 130(C).
    • Handle: RePEc:eee:jimfin:v:130:y:2023:i:c:s0261560622001462
    DOI: 10.1016/j.jimonfin.2022.102743
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    2. Puonti, Päivi, 2023. "Effective Fiscal Policy in an Aging Economy: Evidence from a BVAR Analysis," ETLA Working Papers 110, The Research Institute of the Finnish Economy.

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    More about this item

    Keywords

    Liquidity Constraint; Saving Constraint; Fiscal Multiplier; Monetary Efficacy; Hand-to-Mouth Households;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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