The Marginal Propensity to Consume over the Business Cycle

• 成果类型: Article
• 署名作者: Gross, Tal; Notowidigdo, Matthew J.; Wang, Jialan
• 署名单位: Boston University; National Bureau of Economic Research; Northwestern University; University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20160287
• 发表日期: 2020
• 页码: 351-384
• 关键词: income changes; interest-rates; fiscal-policy; credit; liquidity; MARKET; bankruptcy; WEALTH; MODEL; debt

摘要

We estimate how the marginal propensity to consume (MPC) out of liquidity varies over the business cycle. Ten years after a Chapter 7 bankruptcy, the bankruptcy flag is removed from the filer's credit report, generating an increase in credit score. In the year following flag removal, credit card limits increase by $778 and credit card balances increase by $290, implying an MPC of 0.37. Using cohorts of flag removals, we find that the MPC was 20 to 30 percent higher during the Great Recession, increased during the 2001 recession, and is positively correlated with the local unemployment rate.