Data and Code for: The Marginal Propensity to Consume over the Business Cycle

Principal Investigator(s): View help for Principal Investigator(s) Tal Gross, Boston University; Matthew Notowidigdo, Northwestern University; Jialan Wang, University of Illinois

Version: View help for Version V1

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Gross-Noto-Wang_AEJ-Macro_replication-kit			10/29/2019 02:54:PM
README.pdf	application/pdf	906.9 KB	10/29/2019 10:53:AM

Project Citation:

Gross, Tal, Notowidigdo, Matthew, and Wang, Jialan. Data and Code for: The Marginal Propensity to Consume over the Business Cycle. Nashville, TN: American Economic Association [publisher], 2020. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2020-06-04. https://doi.org/10.3886/E115211V1

Project Description

Summary: We estimate how the marginal propensity to consume (MPC) out of liquidity varies over the business cycle. Ten years after a Chapter 7 bankruptcy, the bankruptcy flag is removed from the filer's credit report, generating an increase in credit score. In the year following flag removal, credit card limits increase by $778 and credit card balances increase by $290, implying an MPC of 0.37. Using cohorts of flag removals, we find that the MPC was 20 to 30 percent higher during the Great Recession, increased during the 2001 recession, and is positively correlated with the local unemployment rate.

Scope of Project

Subject Terms: bankruptcy; recession; mpc

JEL Classification:
      D12 Consumer Economics: Empirical Analysis
      E30 Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
      K35 Personal Bankruptcy Law

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V1 [2020-06-04]

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