Events at CERGE-EI

Presenter: Vardan Simonyan, a PhD student at CERGE-EI

Title: "Household Asset Responses to Fiscal Stimulus: Evidence from the United States."

Abstract: A large literature estimates how households spend fiscal stimulus transfers, but how they save them — and into which asset classes — remains almost entirely unstudied. I estimate asset-class-specific Marginal Propensities to Save (MPS) for the 2020 CARES Act Economic Impact Payment (EIP1) using the Consumer Expenditure Survey Public Use Microdata (CE PUMD) and a Regression Kink Design (RKD) that exploits the slope change in the EIP formula at $75,000 of adjusted gross income. I find that households near the income kink significantly increased retirement (IRA) saving in response to EIP receipt, with a Wald MPS estimate of approximately $288 per $1,000 of EIP. Riskless saving — proxied by credit card debt paydown — also responds significantly, with an MPS of approximately $10 per $1,000. The liquid asset response is statistically indistinguishable from zero. Stock asset estimates are positive but underpowered. These findings are robust to income controls and pass placebo kink tests. The results suggest that households near the phaseout threshold used stimulus funds primarily to strengthen their long-term financial position rather than their liquid buffer stocks, consistent with a precautionary saving motive operating through the illiquid rather than liquid margin