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The Marginal Propensity to Consume During the COVID-19 Pandemic: Evidence from Thailand and Vietnam
In evaluating surveys conducted in Thailand and Vietnam during the COVID-19 pandemic, we find that the marginal propensity to consume is significantly larger for positive than for negative income shocks. This result contradicts a prediction from the lifecycle permanent income model with borrowing co...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 07-2022) |
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| Main Authors: | , , , |
| Format: | Article |
| Language: | English |
| Published: |
Philipps-Universität Marburg
2022
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | In evaluating surveys conducted in Thailand and Vietnam during the COVID-19 pandemic, we find that the marginal propensity to consume is significantly larger for positive than for negative income shocks. This result contradicts a prediction from the lifecycle permanent income model with borrowing constraints as well as empirical evidence from industrialized countries. However, our finding is consistent with Kahneman and Tversky’s prospect theory, according to which the combination of income uncertainty and loss aversion can induce households to react more strongly to positive than to negative shocks. |
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| Physical Description: | 8 Pages |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0716 |