Advanced Search
MyIDEAS: Login to save this paper or follow this series

A Model of the Consumption Response to Fiscal Stimulus Payments

Contents:

Author Info

  • Gianluca Violante

    (NYU)

  • Greg Kaplan

    (University of Pennsylvania)

Abstract

Preliminary results show that when this model is parameterized to match a number of targets - in particular the joint cross-sectional distribution of liquid and illiquid wealth - it is able to generate responses to fiscal stimulus payments of the observed order of magnitude. The model is also consistent with two other important facts documented in the empirical literature: 1) household consumption does not respond significantly to large anticipated income changes, and 2) the estimated consumption responses to tax rebates appear to be the result of very high marginal propensities to consume for a minority of households (around 1/4).

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 243.

as in new window
Length:
Date of creation: 2011
Date of revision:
Handle: RePEc:red:sed011:243

Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Fax: 1-314-444-8731
Email:
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Telyukova, Irina, 2008. "Household Need for Liquidity and the Credit Card Debt Puzzle," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt4c67r71r, Department of Economics, UC San Diego.
  2. Annamaria Lusardi & Daniel J. Schneider & Peter Tufano, 2011. "Financially Fragile Households: Evidence and Implications," NBER Working Papers 17072, National Bureau of Economic Research, Inc.
  3. Jeffrey R. Campbell & Zvi Hercowitz, 2009. "Liquidity constraints of the middle class," Working Paper Series, Federal Reserve Bank of Chicago WP-09-20, Federal Reserve Bank of Chicago.
  4. Jonathan A. Parker & Nicholas S. Souleles & David S. Johnson & Robert McClelland, 2011. "Consumer Spending and the Economic Stimulus Payments of 2008," NBER Working Papers 16684, National Bureau of Economic Research, Inc.
  5. Martin Browning & Thomas F. Crossley, 2001. "The Life-Cycle Model of Consumption and Saving," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 15(3), pages 3-22, Summer.
  6. Fatih Guvenen, 2005. "An Empirical Investigation of Labor Income Processes," Macroeconomics, EconWPA 0508026, EconWPA.
  7. Jack Favilukis & Sydney C. Ludvigson & Stijn Van Nieuwerburgh, 2010. "The Macroeconomic Effects of Housing Wealth, Housing Finance, and Limited Risk-Sharing in General Equilibrium," NBER Working Papers 15988, National Bureau of Economic Research, Inc.
  8. Julia K. Thomas & Aubhik Khan, 2005. "Inflation and Interest Rates with Endogenous Market Segmentation," 2005 Meeting Papers, Society for Economic Dynamics 170, Society for Economic Dynamics.
  9. Andrés Erosa & Gustavo Ventura, 2000. "On Inflation as a Regressive Consumption Tax," UWO Department of Economics Working Papers, University of Western Ontario, Department of Economics 20001, University of Western Ontario, Department of Economics.
  10. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2009. "Unequal we stand: an empirical analysis of economic inequality in the United States, 1967-2006," Staff Report, Federal Reserve Bank of Minneapolis 436, Federal Reserve Bank of Minneapolis.
  11. Greg Kaplan & Giovanni L. Violante, 2010. "How Much Consumption Insurance beyond Self-Insurance?," American Economic Journal: Macroeconomics, American Economic Association, American Economic Association, vol. 2(4), pages 53-87, October.
  12. Jonathan Heathcote, 2003. "Fiscal Policy with Heterogeneous Agents and Incomplete Markets," Working Papers, Georgetown University, Department of Economics gueconwpa~03-03-23, Georgetown University, Department of Economics.
  13. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2009. "Quantitative Macroeconomics with Heterogeneous Households," NBER Working Papers 14768, National Bureau of Economic Research, Inc.
  14. Chatterjee, S. & Corbae, D., 1990. "Endogenous Market Participation and the General Equelibrium Value of Money," Working Papers, University of Iowa, Department of Economics 90-30a, University of Iowa, Department of Economics.
  15. Ricardo Reis & Hyunseung Oh, 2011. "Targeted Transfers and the Fiscal Response to the Great Recession," Discussion Papers, Columbia University, Department of Economics 1011-10, Columbia University, Department of Economics.
  16. Misra, Kanishka & Surico, Paolo, 2011. "Heterogeneous Responses and Aggregate Impact of the 2001 Income Tax Rebates," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8306, C.E.P.R. Discussion Papers.
  17. Richard Blundell, 2009. "Assessing the Temporary VAT Cut Policy in the UK," Fiscal Studies, Institute for Fiscal Studies, Institute for Fiscal Studies, vol. 30(1), pages 31-38, 03.
  18. Xavier Ragot, 2009. "The Case for a Financial Approach to Money Demand," 2009 Meeting Papers, Society for Economic Dynamics 474, Society for Economic Dynamics.
  19. M. Dolores Collado & Martín Browning, 1999. "-The Response Of Expenditures To Anticipated Income Changes: Panel Data Estimates," Working Papers. Serie AD, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) 1999-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  20. Cochrane, John H, 1989. "The Sensitivity of Tests of the Intertemporal Allocation of Consumption to Near-Rational Alternatives," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 319-37, June.
  21. Guido Lorenzoni & Veronica Guerrieri, 2011. "Credit Crises, Precautionary Savings and the Liquidity Trap," 2011 Meeting Papers, Society for Economic Dynamics 1414, Society for Economic Dynamics.
  22. Huggett, Mark, 1996. "Wealth distribution in life-cycle economies," Journal of Monetary Economics, Elsevier, Elsevier, vol. 38(3), pages 469-494, December.
  23. David Card & Raj Chetty & Andrea Weber, 2007. "Cash-On-Hand and Competing Models of Intertemporal Behavior: New Evidence from the Labor Market," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 122(4), pages 1511-1560, November.
  24. Krueger, Dirk & Kubler, Felix, 2004. "Computing equilibrium in OLG models with stochastic production," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 28(7), pages 1411-1436, April.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. A Model of the Consumption Response to Fiscal Stimulus Payments
    by Christian Zimmermann in NEP-DGE blog on 2011-08-31 14:32:20
  2. Who spent the 2001 Bush tax rebate?
    by Economic Logician in Economic Logic on 2011-09-14 14:37:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Economic Logic blog

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:red:sed011:243. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.