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Longitudinal Study: HILDA
Title: Estimating Marginal Propensitites to Consume in Australia Using Micro Data
Authors: Chung, L 
Berger-Thomson, L 
McKibbin, R 
Institution: Reserve bank of Australia
Issue Date: 21-Apr-2011
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
Technical working papers and reports
Appears in Collections:Reports

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