Data and Code for: LESS is MORE: Consumer Spending and the Size of Economic Stimulus Payments

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Authors: Michele Andreolli, Paolo Surico
Cited by: 0

Abstract

We study the consumption response to unexpected transitory income gains of different size, using hypothetical questions from the Italian Survey of Household Income and Wealth. Families with low cash-on-hand display a higher Marginal Propensity to Consume (MPC) out of the small gains while affluent households exhibit a higher MPC out of the large gains. The spending behaviour of low-income families is consistent with the predictions of models with borrowing constraints and uninsurable income risk whereas the consumption pattern of higher earners can be accounted for by non-homothetic preferences on non-essentials. Our results suggest that, for a given level of public spending, a fiscal transfer of smaller size paid to a larger group of low-income households stimulates aggregate consumption more than a larger transfer paid to a smaller group.

Fields of Study & Subjects

Financial Literacy Pension Retirement Analysis Income Poverty and Inequality Monetary Policy and Economic Impact

Publication details

Journal / source
ICPSR Data Holdings
Publication date
12 January 2026
Language
EN
Document type
Dataset