We estimate the unconditional distribution of marginal propensities to consume (MPC) using clustering regression applied to the 2008 economic stimulus payments. By deviating from the standard approach of estimating MPC heterogeneity using interactions with observables, we can recover the full distribution of MPCs. We find households spent at least 8% of the rebate, and individual households used rebates for different goods. While many observables correlate individually with our estimated MPCs, these relationships disappear when tested jointly, except for income and the average propensity to consume. Household observables explain only 8% of MPC variation, highlighting the role of latent heterogeneity.
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