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Spending response to cash transfers to shield households from inflation: Evidence from bank accounts

Author

Listed:
  • Aspachs, Oriol
  • Graziano, Alberto
  • Mestres, Josep
  • Montalvo, Jose G.
  • Reynal-Querol, Marta

Abstract

We use daily data from a large Spanish financial institution to analyze the spending responses to a one-off cash transfer to mitigate the impact of the surge in inflation during the 2022–2023 period. Using a staggered difference-in-differences estimator robust to treatment effect heterogeneity, we find that most of the expenditure is concentrated around the date of the transfer and that the average marginal propensity to spend is around 30%. The results are robust to changes in the main specification.

Suggested Citation

  • Aspachs, Oriol & Graziano, Alberto & Mestres, Josep & Montalvo, Jose G. & Reynal-Querol, Marta, 2024. "Spending response to cash transfers to shield households from inflation: Evidence from bank accounts," Economics Letters, Elsevier, vol. 238(C).
    • Handle: RePEc:eee:ecolet:v:238:y:2024:i:c:s0165176524001678
    DOI: 10.1016/j.econlet.2024.111684
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    More about this item

    Keywords

    Marginal propensity to spend; Inflation; Administrative data; High frequency data;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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