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Racial Heterogeneity in Consumption Responses to the Economic Impact Payment

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  • Yulina Goto
  • Makoto Nakajima

Abstract

We investigate how the consumption responses to the Economic Impact Payment during the pandemic (commonly known as the pandemic stimulus check) differed across racial groups, and what accounts for the differences. If only family size and age are controlled, as in the baseline regression of Parker et al. (2022), in addition to race, Black and Hispanic households exhibit a higher marginal propensity to consume (MPC, preferred estimate being 0.29) than Whites (0.16) in response to monetary transfers under the Economic Impact Payment. This racial heterogeneity is accounted for by differences in liquid wealth holdings

Suggested Citation

  • Yulina Goto & Makoto Nakajima, 2026. "Racial Heterogeneity in Consumption Responses to the Economic Impact Payment," Working Papers 26-06, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:102352
    DOI: 10.21799/frbp.wp.2026.06
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    References listed on IDEAS

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    1. Kirill Borusyak & Xavier Jaravel & Jann Spiess, 2024. "Revisiting Event-Study Designs: Robust and Efficient Estimation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(6), pages 3253-3285.
    2. Jonathan A. Parker, 1999. "The Reaction of Household Consumption to Predictable Changes in Social Security Taxes," American Economic Review, American Economic Association, vol. 89(4), pages 959-973, September.
    3. Kosar, Gizem & Melcangi, Davide & Pilossoph, Laura & Wiczer, David, 2023. "Stimulus through Insurance: The Marginal Propensity to Repay Debt," IZA Discussion Papers 16211, IZA Network @ LISER.
    4. Christopher Carroll & Jiri Slacalek & Kiichi Tokuoka & Matthew N. White, 2017. "The distribution of wealth and the marginal propensity to consume," Quantitative Economics, Econometric Society, vol. 8(3), pages 977-1020, November.
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    Keywords

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    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
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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