Direct Stimulus Payments to Individuals in the COVID-19 Pandemic

Direct Stimulus Payments

General Information

Description

Direct Stimulus Payments to Individuals in the Covid-19 Pandemic is a project led by Professors Plutarchos Sakellaris from the Athens University of Economics and Business, and Christos Kotsogiannis from the Tax Administration Research Centre, University of Exeter Business School.  It has been supported by the Hellenic Foundation for Research and Innovation.

The main economic instrument used by governments to soften the adverse economic consequences from COVID-19 has taken the form of transfer payments to households.  The goal of these transfers has been twofold:

First, to support the welfare of those hit by unemployment, or other shocks, by sustaining their consumption;

Second, to boost the macroeconomy through the secondary effects of immediate household spending.

As most countries are constrained by their debt burden in the amount of fiscal resources they can bring to the war against COVID-19, it is important to design fiscal policies carefully for optimal results. How much of an unexpected income transfer would the household spend for consumption during a short horizon? In other words, what is households’ Marginal Propensity to Consume (MPC) out of transitory income?

In the proposed project, our objective has been to provide an answer, utilising data data collected on consumption, saving, and debt behaviour together with expectations on future activity, and behavioural characteristics from a survey of 1014 Greek households/taxpayers . For a substantial portion of these households the information pertained to two periods: December 2019/January 2020 (well before there was wide public awareness in Greece about COVID-19), as well as the end of April 2020 (the peak of the health crisis so far in Greece).

The project included three events, two workshop and one policy discussion. Details of these events are provided below.

Acknowledgements

The research project has been supported by the Hellenic Foundation for Research and Innovation (H.F.R.I.) under the 4th Call for Action “Science and Society”- Emblematic Action – “Interventions to address the economic and social effects of the COVID-19 pandemic” (project ID: FISCALCONS 05007).

Papers

The paper of the project will appear here shortly.

 

Workshops

Workshop 1: Direct Stimulus Payments to Individuals in the COVID-19 Pandemic (24 May 2022) 

Paper 1:	Household Spending Responses to the Economic Impact Payments of 2020: Evidence from the Consumer Expenditure Survey, Jonathan Parker (MIT); Jake Schild (BLS); Laura Erhard (BLS); David Johnson (ISR University of Michigan) Discussant: Claudia Sahm (SAHM Consulting)
Paper 2:	Heterogeneity in the Marginal Propensity to Consume Before and During the COVID-19 Pandemic: Evidence from a Lottery and Administrative Data,' Plutarchos Sakellaris (Athens University of Economics and Business); Christos Kotsogiannis (University of Exeter, TARC) Discussant: Davide Melcangi (Federal Reserve Bank of New York)
Paper 3:	'The Marginal Propensity to Consume in Heterogeneous Agent Models,' Giovanni Violante (Princeton University) and Greg Kaplan (University of Chicago) Discussant: Xavier Mateos-Planas (Queen Mary University of London)
Paper 4:	'Income, Liquidity, and the Consumption Response to the 2020 Economic Stimulus Payments,'  Scott Baker (Northwestern University); R.A. Farrokhnia (Columbia Business School); Steffen Meyer (University of Southern Denmark); Michaela Pagel (Columbia Business School); Constantine Yiannelis (University of Chicago Booth School of Business)  Discussant:  Dimitris Georgarakos. (European Central Bank)

You can view the recording of this workshop here.

 

Workshop 2: Household Responses to Direct Stimulus Payments and Other Shocks  (25 August 2022) 

 

Paper 1:	‘The Anatomy of Consumption in a Household Foreign Currency Debt Crisis,’ Gyozo Gyongyosi (Leibniz Institute of Financial Research SAFE); Judit Rariga (European Central Bank); Emil Verner (MIT) Discussant: Dimitris Christelis (University of Glasgow)
Paper 2:	'Fiscal Stimulus, Inter- and Intratemporal Consumption Spending: Evidence from a 5 Billion Euro Experiment,' Gregor Pfeifer (University of Sydney); Davud Rostam-Afschar (University of Mannheim); Tim Ruberg (University of Honenheim); Lukas Treber (University of Honenheim) Discussant: Michael Boutros (Bank of Canada)
Paper 3:	'Who are the hand to mouth?' Marc Aguiar (Princeton University) Mark Bils (University of Rochester) and Corina Boar (New York University) Discussant: Krisztina Molnar (NHH Norwegian School of Economics)

You can view the recording of this workshop here.

 

Round table discussion: Economic Policy Responses to the COVID-19 Pandemic and Other Crises (27 March 2023)

Panellists:

Professor Michael Arghyrou - Greek Ministry of Finance

Professor Giancarlo Corsetti – European University Institute

Professor Maria Demertzis – Bruegel and European University Institute

Professor Christos Kotsogiannis – Tax Administration Research Centre, University of Exeter

Professor Evi Pappa - University Carlos III Madrid

Panel moderator:

Professor Plutarchos Sakellaris - Athens University of Economics and Business and European University Institute

You can view the recording of this workshop here.