https://macropaperwarehouse.com/authors/johannes-f-wieland/Johannes F WielandHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/micro-mpcs-and-macro-counterfactuals-the-case-of-the-2008-rebates/https://macropaperwarehouse.com/papers/micro-mpcs-and-macro-counterfactuals-the-case-of-the-2008-rebates/<p><strong>Research question.</strong> Do the high marginal propensities to consume (MPCs) estimated in the leading household studies of the 2008 U.S. tax rebates—particularly Parker et al. (2013), which found MPCs of 50–90 percent within three months—imply plausible macroeconomic counterfactuals? And if not, what combination of micro-level bias corrections and general equilibrium forces reconciles the micro evidence with aggregate data?</p> <p><strong>Setting.</strong> The 2008 Economic Stimulus Act distributed approximately $100 billion in tax rebates, totaling eleven percent of January 2008 monthly disposable income. Among the 85 percent of households receiving a check, the average amount was $1,000. Rebates were distributed primarily from April through July 2008, with nearly half delivered in May alone. The timing of receipt was determined by the last two digits of Social Security numbers, providing quasi-random variation exploited by the household-level literature.</p>