Financial Concerns and the Marginal Propensity to Consume in COVID Times: Evidence from UK Survey Data
IMF Working Papers, March 4, 2022
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- Financial Concerns and the Marginal Propensity to Consume in COVID Times: Evidence from UK Survey Data
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Bibliographic details
- Authors: Bruno Albuquerque, Georgina Green
- Published: March 4, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400203466.001
Study objective and data
- Objective: Study how household concerns about their future financial situation may affect the marginal propensity to consume (MPC) during the COVID-19 pandemic.
- Data: Representative survey of UK households used to compute the MPC from a hypothetical transfer of £500.
- MPC elicitation: Based on responses to a hypothetical £500 transfer.
Key findings
- Households concerned about not being able to make ends meet have a 20% higher MPC than other households.
- Household expectations play a key role in determining differences in MPCs across households.
- Implicit finding: The distributional dimension of concerns and expectations matters for aggregate demand responses to transfers.
Policy implications and recommendations
- Policies targeted to vulnerable and financially distressed households may prove more effective in stimulating demand than providing stimulus payments to all households.
- Targeting transfers where financial concerns are concentrated could raise the demand multiplier of fiscal support during pandemic times.
Notable publication attributes and keywords
- Authors: Bruno Albuquerque, Georgina Green
- Date: March 4, 2022
- Pages: 52
- Series: Working Paper No. 2022/047
- Issue: 047
- DOI: https://doi.org/10.5089/9798400203466.001
- ISBN: 9798400203466
- ISSN: 1018-5941
- Subject tags: Consumption, COVID-19, Health, Income, Income shocks, Labor, National accounts, Unemployment
- Keywords: Consumption; COVID survey; COVID-19; elicited MPC; Expectations; Financial concerns; Fiscal policy.; Household behaviour; household expectation; household income; Income; Income shocks; Marginal propensity to consume; marginal propensity to consume in COVID times; MPC question; representative survey; spending normalisation effect; Survey data; Unemployment
IMF Working Paper: "Financial Concerns and the Marginal Propensity to Consume in COVID Times: Evidence from UK Survey Data" (Bruno Albuquerque, Georgina Green), March 4, 2022.
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- Working Paper