Plutarchos Sakellaris 'The Marginal Propensity to Consume in a Depressed Economy: Evidence from a Lottery and Administrative Data'
Abstract: We use the quasi-experimental setting of a tax lottery together with administrative data on tax and income household histories, and a specially conducted survey of sample households to provide reported-preference and revealed-preference estimates of the marginal propensity to consumer (MPC). In the depressed economic environment of Greece, with scarce opportunities for consumer credit, we uncover significantly higher MPCs than previous literature. There is significant heterogeneity in MPC, and we link it to observable household characteristics.
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