Marginal Propensity

The Basics of Propensity Scoring and Marginal Structural Models

The Marginal Propensity to Consume Out of Liquidity: Evidence from Random Assignment of 54,522 Credit Lines∗

This paper studies how consumer spending, debt, and labor supply decisions respond to an exogenous shock to credit availability. I design and implement a randomized trial at a European retail bank where I deliberately vary the credit card limits of 54,522 pre-existing card holders. I obtain four empirical results: (1) credit availability has a large and significant effect on spending and the us...

MPCPerm big.tex Precautionary Saving and the Marginal Propensity To Consume Out of Permanent Income

Because the budget constraint implies that consumption must eventually fully adjust to permanent shocks, intuition suggests that consumption-smoothers will have an immediate marginal propensity to consume of one out of permanent shocks. However, this paper shows that if consumers are impatient and experience both transitory and permanent income shocks, the immediate marginal propensity to consu...

The performance of different propensity score methods for estimating marginal hazard ratios

Propensity score methods are increasingly being used to reduce or minimize the effects of confounding when estimating the effects of treatments, exposures, or interventions when using observational or non-randomized data. Under the assumption of no unmeasured confounders, previous research has shown that propensity score methods allow for unbiased estimation of linear treatment effects (e.g., d...

Precautionary Saving and the Marginal Propensity to Consume Out of Permanent Income

The budget constraint requires that, eventually, consumption must adjust fully to any permanent shock to income. Intuition suggests that, knowing this, optimizing agents will fully adjust their spending immediately upon experiencing a permanent shock. However, this paper shows that if consumers are impatient and are subject to transitory as well as permanent shocks, the optimal marginal propens...