Financial concerns and the marginal propensity to consume in COVID times: Evidence from UK survey data

Bruno Albuquerque and Georgina Green

Journal of Macroeconomics, 2023, vol. 78, issue C

Abstract: We study how household concerns about their future financial situation may affect the marginal propensity to consume (MPC) during the COVID-19 pandemic. We use a representative survey of UK households to compute the MPC from a hypothetical transfer of £500. We find that household expectations play a key role in determining differences in MPCs across households: households that are concerned about not being able to make ends meet have a 20% higher MPC than other households. Our findings suggest that policies targeted at vulnerable and financially distressed households may prove more effective in stimulating demand than providing stimulus payments to all households.

Keywords: COVID-19; Marginal propensity to consume; Survey data; Household behaviour; Expectations; Financial concerns; Fiscal policy (search for similar items in EconPapers)
JEL-codes: D12 E21 E62 G51 H31 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Financial concerns and the marginal propensity to consume in Covid times: evidence from UK survey data (2022)
Working Paper: Financial Concerns and the Marginal Propensity to Consume in COVID Times: Evidence from UK Survey Data (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:78:y:2023:i:c:s0164070423000630

DOI: 10.1016/j.jmacro.2023.103563

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