TY  - UNPD
A1  - Jappelli, Tullio
A1  - Pistaferri, Luigi
T1  - Fiscal policy and MPC heterogeneity
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2013,14
N2  - We use responses to survey questions in the 2010 Italian Survey of Household Income and Wealth that ask consumers how much of an unexpected transitory income change they would consume. We find that the marginal propensity to consume (MPC) is 48 percent on average, and that there is substantial heterogeneity in the distribution. We find that households with low cash-on-hand exhibit a much higher MPC than affluent households, which is in agreement with models with precautionary savings where income risk plays an important role. The results have important implications for the evaluation of fiscal policy, and for predicting household responses to tax reforms and redistributive policies. In particular, we find that a debt-financed increase in transfers of 1 percent of national disposable income targeted to the bottom decile of the cash-on-hand distribution would increase aggregate consumption by 0.82 percent. Furthermore, we find that redistributing 1% of national disposable income from the top to the bottom decile of the income distribution would boost aggregate consumption by 0.33%.
T3  - CFS working paper series - 2013, 14 
KW  - marginal propensity to consume
KW  - fiscal policy
KW  - consumption heterogeneity
Y1  - 2013
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/32491
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-324913
PB  - Center for Financial Studies
CY  - Frankfurt, M.
ER  -