Data and Code for: 'Does Consumption Respond to Transitory Shocks?'

Principal Investigator(s):  View help for Principal Investigator(s) Jeanne Commault, Sciences Po Paris

Version:  View help for Version V1

Name File Type Size Last Modified
  Main 10/11/2020 05:58:PM
  PSID_post99 10/11/2020 06:03:PM
  Simulations 10/11/2020 06:16:PM
ReadMe_openicpsr-120489.docx application/vnd.openxmlformats-officedocument.wordprocessingml.document 38.5 KB 10/10/2020 12:28:PM
Read_Me_openicpsr-120489.pdf application/pdf 168.9 KB 12/10/2020 01:10:AM

Project Citation: 

Commault, Jeanne. Data and Code for: “Does Consumption Respond to Transitory Shocks?” Nashville, TN: American Economic Association [publisher], 2022. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-03-25. https://doi.org/10.3886/E120489V1

Project Description

Summary:  View help for Summary
Studies based on natural experiments find that consumption responds strongly and significantly to a transitory variation in income, while semi-structural estimations find no pass-through of transitory shocks to consumption. I develop a robust semi-structural estimator that relaxes the assumption that log-consumption is a random walk. The robust pass-through estimate is significant and large, implying a yearly MPC of 0.32, close to the natural experiment findings. The robust estimator performs well in numerical simulations of a life-cycle model while non-robust estimators do not. The difference between the two in the simulations is similar to the difference in the survey data.

Scope of Project

Subject Terms:  View help for Subject Terms Marginal propensity to consume; Transitory income shocks; Life-cycle model
JEL Classification:  View help for JEL Classification
      D11 Consumer Economics: Theory
      D12 Consumer Economics: Empirical Analysis
      D15 Intertemporal Household Choice; Life Cycle Models and Saving
      E21 Macroeconomics: Consumption; Saving; Wealth
Geographic Coverage:  View help for Geographic Coverage United States
Time Period(s):  View help for Time Period(s) 1978 – 1992 (also 1999 - 2017 to run checks)
Collection Date(s):  View help for Collection Date(s) 1979 – 1993
Universe:  View help for Universe
Households that are continuously married over the period, without any dramatic change in family composition, headed by a male between age 30 and age 65, without missing reports on race, education, and region.
Data Type(s):  View help for Data Type(s) survey data

Methodology

Data Source:  View help for Data Source
Panel Study of Income Dynamics (PSID) between 1978 and 1992

See detailed information: https://psidonline.isr.umich.edu/Guide/ug/psidguide.pdf
Unit(s) of Observation:  View help for Unit(s) of Observation Household

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Published Versions

V1 [2022-03-25]

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