This paper studies empirical facts regarding the effects of unexpected changes
in aggregate macroeconomic fiscal policies on consumers that differ depending on individual
characteristics. We use data from the Consumption Expenditure Survey to estimate
individual-level responses and multipliers for government spending. We find that unexpected
fiscal shocks have substantially different effects on consumers depending on their
income and age levels: the wealthiest individuals tend to behave according ...
This paper studies empirical facts regarding the effects of unexpected changes
in aggregate macroeconomic fiscal policies on consumers that differ depending on individual
characteristics. We use data from the Consumption Expenditure Survey to estimate
individual-level responses and multipliers for government spending. We find that unexpected
fiscal shocks have substantially different effects on consumers depending on their
income and age levels: the wealthiest individuals tend to behave according to predictions of
standard RBC models, whereas the poorest ones behave according to standard IS-LM (non-
Ricardian) models, most likely due to credit constraints. Furthermore, government spending
policy shocks tend to decrease consumption inequality.
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