20220303-IMF-Financial_Concerns_and_the_Marginal_Propensity_to_Consume_in_COVID_Times_Evidence_from_UK_Survey_Data_52页_1mb

Title: Financial Concerns and the Marginal Propensity to Consume in COVID Times: Evidence from UK Survey Data
Authors: Bruno Albuquerque, Georgina Green
Institution: IMF
Date: 2022
Abstract:

This paper examines the impact of household financial concerns on the marginal propensity to consume (MPC) during the COVID-19 pandemic using UK survey data. The study uses a hypothetical £500 payment to measure MPC from a representative survey. The key findings are: (1) Households with higher financial concerns (e.g., inability to pay bills) have a significantly higher MPC (20% higher than others), despite theoretical predictions that financial worries should reduce MPC.
(2) These results are robust to controls for current financial difficulties, liquidity constraints, and regional shocks. Behavioral models and mental accounting may explain this pattern.
(3) Policies targeting financially vulnerable households may be more effective than general stimulus payments. This research highlights the importance of household expectations in demand stimulation during crises.