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Longitudinal Study: HILDA
Title: Estimating Marginal Propensities to Consume in Australia Using Micro Data
Authors: Chung, L 
McKibbin, R 
Berger-Thomson, L 
Institution: Reserve bank of Australia
Publication Date: 21-Nov-2009
Pages: 38
Keywords: HILDA
panel data
marginal propensity to consume
Abstract: This paper uses micro data from the Household, Income and Labour Dynamics in Australia Survey to estimate the marginal propensity to consume. Estimates are made by examining two types of policy changes – to income tax rates and lump-sum transfers – which help to identify the effect of shocks to income on consumption. A standard Euler equation for consumption is used to analyse the effect of income tax changes. The marginal propensity to consume out of lump-sum transfers is estimated using fixed effects and propensity score matching. In addition, the paper examines differences in the marginal propensity to consume across households according to measures of liquidity constraints and unemployment risks.
Keywords: Finance; Finance -- Expenditure and constraints on expenditure
Research collection: Reports and technical papers
Appears in Collections:Reports

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