We present five facts from an experiment on the marginal propensity to consume (MPC) out of transitory transfers: (1) the one-month MPC on a cash-like transfer is 23 percent; (2) it is substantially higher (61 percent) on a transfer administered via a card where remaining funds expire after three weeks, inconsistent with money fungibility; (3) the consumption response is concentrated in the first three weeks; (4) MPCs vary with household characteristics but are high even for the liquid wealthy; (5) unconditional MPC distribution exhibits large variation. Our findings inform the design of stimulus policies and pose challenges to existing macroeconomic models.
Johannes Boehm, Etienne Fize and Xavier Jaravel
1 January 2025
American Economic Review 115(1) , pp.1-42, 2025
DOI: 10.1257/aer.20240138
https://www.aeaweb.org/articles?id=10.1257/aer.20240138
This work is published under POID and the CEP's Trade programmeGrowth programme.