A Raise for Grandma: Pensions and Household Expenditure*

• 成果类型: Article
• 署名作者: Parraga Rodriguez, Susana
• 署名单位: Banco de Espana
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueac061
• 发表日期: 2022
• 页码: 390-419
• 关键词: economic stimulus payments; income tax changes; consumption response; smooth consumption; consumer response; fiscal-policy; macroeconomy; inference; debt

摘要

This paper analyses the causal effect of changes in public pensions on household spending. The identification exploits the introduction of a new welfare system in Spain during the 1980s and 1990s, and uses a novel narrative series of legislated pension changes as an instrument for pension income. Despite public pensions having a limited impact in the aggregate, I find a high, though less than unity, marginal propensity to consume for pensioners due to permanent income shocks at the household level. Moreover, large spending responses for pensioners with the highest income and wealth mean that liquidity considerations can be disregarded as a key source of marginal propensity to consume heterogeneity. Instead, a strong precautionary savings motive can explain the excess smoothness of consumption, and costly adjustments explain the skewed spending response for durables.