Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324757 
Year of Publication: 
2025
Series/Report no.: 
ECONtribute Discussion Paper No. 367
Publisher: 
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI), Bonn and Cologne
Abstract: 
What stimulus payments replicate the consumption effect of a desired (but potentially infeasible) interest rate cut? Using granular full-population administrative data, we estimate consumption responses to interest rate changes via adjustable-rate mortgage resets and lump-sum cash windfalls from unanticipated inheritances. Combining them, we map a 1 percentage point monetary-policy rate decrease to equivalent uniform transfers of ≈ $1,000 per person paid over 5 years, totaling 1.3% of GDP. This estimate remains robust when accounting for heterogeneity in the cross-sectional incidence of these macro-equivalent policies. We find only modest heterogeneity in marginal propensities to consume, limiting efficiency gains from targeting transfers.
Subjects: 
Marginal propensity to consume
monetary policy
fiscal policy
mortgages
JEL: 
D12
E21
E43
E52
E63
G51
H31
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.