MPC Heterogeneity and Household Balance Sheets

• 成果类型: Article
• 署名作者: Fagereng, Andreas; Holm, Martin B.; Natvik, Gisle J.
• 署名单位: BI Norwegian Business School; Statistics Norway; University of Oslo
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20190211
• 发表日期: 2021
• 页码: 1-54
• 关键词: anticipated income changes; monetary-policy; consumption response; WEALTH; lottery; debt; credit; RISK; expenditure; propensity

摘要

We use sizable lottery prizes in Norwegian administrative panel data to explore how transitory income shocks are spent and saved over time and how households' marginal propensities to consume (MPCs) vary with household characteristics and shock size. We find that spending peaks in the year of winning and gradually reverts to normal within five years. Controlling for all items on households' balance sheets and characteristics such as education and income, it is the amount won, age, and liquid assets that vary systematically with MPCs. Low-liquidity winners of the smallest prizes (around US$1,500) are estimated to spend all within the year of winning. The corresponding estimate for -high-liquidity winners of large prizes ( US$8, 300-150,000) is slightly below one-half. While conventional models will struggle to account for such high MPC levels, we show that a -two-asset -life cycle model with a realistic earnings profile and a luxury bequest motive can account for both the time profile of consumption responses and their systematic covariation with observables.