‘Financial concerns’ impact consumption – BoE paper

Bank of England
Daniel Hinge

Households that are worried about their finances are more likely to consume financial windfalls, research published by the Bank of England finds.

Bruno Albuquerque and Georgina Green examine survey data on UK households’ consumption patterns during Covid-19. They use a question on how a household would spend or save a one-off £500 ($650) payment to construct a measure of marginal propensity to consume (MPC).

Across their panel of households, the authors find the average MPC is “only 11%”

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