A Raise for Grandma
Pensions and Household Expenditure
Bibliographic Data
| ID | 9713836 |
|---|---|
| Authors | Susana Párraga Rodríguez (0000-0001-5902-3344, Bank of Spain, corresponding author) |
| Year | 2022 |
| Volume | 133 |
| Issue | 649 |
| Pages | 390-419 |
| Publication date | 2022-12-10 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (PUBLISHER • GB) |
| DOI | 10.1093/ej/ueac061 |
| OpenAlex | W4295227047 |
| Language | EN |
| References cited | 46 |
This paper analyses the causal effect of changes in public pensions on household spending. The identification exploits the introduction of a new welfare system in Spain during the 1980s and 1990s, and uses a novel narrative series of legislated pension changes as an instrument for pension income. Despite public pensions having a limited impact in the aggregate, I find a high, though less than unity, marginal propensity to consume for pensioners due to permanent income shocks at the household level. Moreover, large spending responses for pensioners with the highest income and wealth mean that liquidity considerations can be disregarded as a key source of marginal propensity to consume heterogeneity. Instead, a strong precautionary savings motive can explain the excess smoothness of consumption, and costly adjustments explain the skewed spending response for durables
Consumption (sociology · Demographic economics · Economics · Identification (biology · Labour economics · Marginal propensity to consume · Market liquidity · Monetary economics · Pension · Permanent income hypothesis · Social security · Welfare · Finance · Financial Literacy, Pension, Retirement Analysis · Global Health Care Issues · Retirement, Disability, and Employment
Time Series and Panel Data Econometrics
The Consumption Response to Income Changes
Consumer Spending and the Economic Stimulus Payments of 2008
Estimation and Inference of Impulse Responses by Local Projections
The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States
Estimating Standard Errors in Finance Panel Data Sets
Household Expenditure and the Income Tax Rebates of 2001
Consumption Inequality and Partial Insurance
Robust Inference With Multiway Clustering
The Effects of Birth Inputs on Birthweight
The Reaction of Consumer Spending and Debt to Tax Rebates—Evidence from Consumer Credit Data
Why Do the Elderly Save? The Role of Medical Expenses
Deconstructing Life Cycle Expenditure
Social Security Benefits, Consumption Expenditure, and the Life Cycle Hypothesis
Can Consumers Distinguish Persistent from Transitory Income Shocks
Time to Cook
Ten Years After the Financial Crisis
| Citation velocity | historical |
|---|---|
| Highly cited | No |