Fiscal Policy's Distributional Impact on Consumption

Fiscal policy is a significant lever for policymakers to influence the financial means of people. However, it can have drastically different implications given one’s wealth and income situation.

The point of this project is to identify the channels through which fiscal policy influences consumption among people of varying credit constraints through a novel method. Together with Paul Hubert and Fergus Cumming, we build upon their 2021 paper to connect individuals’ asset liquidity with a unique fiscal policy dataset and estimate the specific consumption impacts. Measuring fiscal shock outcomes has not always been accurate (particularly in predicting them), and thus an alternative Narrative approach in conjunction with the heterogeneity of agents is employed.

Work in progress.