N°23-57: Spend or Invest? Analyzing MPC Heterogeneity Across Three Stimulus Programs

I employ data gathered by an account aggregator app covering the universe of user transactions to study the effects of three waves of stimulus checks on U.S. households’ investments, consumption, and savings. I analyze within-person variation in consumption sensitivity showing that higher liquidity and debt levels lead to smaller consumption responses. Using relative timing of stimulus and tax refunds, I illustrate the role of liquidity. Lastly, I estimate marginal propensities to invest and show a strong effect on market participation. There is a significant gender gap in the use of funds for investment.