Consumption Heterogeneity: Micro Drivers and Macro Implications

We document heterogeneity in the marginal propensity to consume (MPC) across household characteristics relevant understanding heterogeneous agent models and monetary policy transmission. find a strong negative relationship between liquid wealth MPC. show that predicts MPC closely for every other characteristic we look at. use new empirical method overcomes sources of bias found existing literature, along with administrative data from Denmark allow us identify behavior. our results analyze transmission mechanisms both United States. (JEL D12, D31, E21, E43, E52, G51)