Replication data for: Liquidity Constraints of the Middle Class
Principal Investigator(s): View help for Principal Investigator(s) Jeffrey R. Campbell; Zvi Hercowitz
Version: View help for Version V1
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Project Citation:
Campbell, Jeffrey R., and Hercowitz, Zvi. Replication data for: Liquidity Constraints of the Middle Class. Nashville, TN: American Economic Association [publisher], 2019. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116529V1
Project Description
Summary:
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Existing evidence from US middle class households shows that their MPCs out of tax rebates greatly exceed the PIH's prediction and are weakly related to their liquid assets. The standard precautionary-saving model predicts the first fact but counterfactually requires MPCs to decrease with liquid wealth. Evidence from the Survey of Consumer Finances indicates widespread saving in anticipation of major expenditures like home purchases and college education. Adding such savings to the standard precautionary-saving model allows it to generate realistic MPCs for households with liquid wealth: the approaching expenditure simultaneously motivates asset accumulation and raises MPCs by shortening the effective planning horizon.
Scope of Project
JEL Classification:
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D14 Household Saving; Personal Finance
D15 Intertemporal Household Choice; Life Cycle Models and Saving
D31 Personal Income, Wealth, and Their Distributions
E21 Macroeconomics: Consumption; Saving; Wealth
H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
H31 Fiscal Policies and Behavior of Economic Agents: Household
D14 Household Saving; Personal Finance
D15 Intertemporal Household Choice; Life Cycle Models and Saving
D31 Personal Income, Wealth, and Their Distributions
E21 Macroeconomics: Consumption; Saving; Wealth
H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
H31 Fiscal Policies and Behavior of Economic Agents: Household
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