Impact of Cash Transfers on Consumption during the COVID-19 Pandemic: Evidence from Japanese Special Cash Payments

Author Name HATTORI Takahiro (University of Tokyo) / KOMURA Norihiro (Kyoto University) / UNAYAMA Takashi (Faculty Fellow, RIETI)
Creation Date/NO. June 2021 21-E-043
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We estimate the marginal propensity to consume (MPC) out of the Special Cash Payment conducted in Japan during the COVID-19 pandemic. The MPC is identified by exploiting differences in the timing of the payment among cities using publicly available data from the Family Income and Expenditure Survey. The estimated MPC is approximately 10 percent, which does not differ from those estimated in previous studies conducted during the non-pandemic period. We also estimate the different MPCs by consumption subcategories defined based on the infection risk, finding that households did not increase spending on "face-to-face services" while "goods/services purchased at home" and "goods/services purchased at stores" increased.

This is the English version of the Japanese Discussion Paper (21-J-022) with some additional information and changes.