MPC Heterogeneity and the Dynamic Response of Consumption to Monetary Policy
Cooper, Russell Le Blanc, Julia Zhu, Guozhong 2024 Ampudia, Miguel
MPC Heterogeneity and the Dynamic Response of Consumption to Monetary Policy - American Economic Journal: Macroeconomics 2024 - 343-388
This paper studies how household financial choices affect the impact of monetary policy on consumption. Based on micro data from four major euro area countries, we estimate key structural parameters using a simulated method of moments approach to match moments related to asset market participation rates, portfolio shares, and wealth-to-income ratios by education and country. The country-specific distributions of marginal propensities to consume (MPCs) out of income and financial wealth are not degenerate. Due to this MPC heterogeneity, monetary policy, operating through income and asset returns, has a differential impact on individuals within and across countries.
1945-7707
Saving
Wealth
Household Finance
Household Saving
Macroeconomics: Consumption
Monetary Policy
MPC Heterogeneity and the Dynamic Response of Consumption to Monetary Policy - American Economic Journal: Macroeconomics 2024 - 343-388
This paper studies how household financial choices affect the impact of monetary policy on consumption. Based on micro data from four major euro area countries, we estimate key structural parameters using a simulated method of moments approach to match moments related to asset market participation rates, portfolio shares, and wealth-to-income ratios by education and country. The country-specific distributions of marginal propensities to consume (MPCs) out of income and financial wealth are not degenerate. Due to this MPC heterogeneity, monetary policy, operating through income and asset returns, has a differential impact on individuals within and across countries.
1945-7707
Saving
Wealth
Household Finance
Household Saving
Macroeconomics: Consumption
Monetary Policy