The Trickling Up of Excess Savings
Working Paper 30900
DOI 10.3386/w30900
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We provide a simple framework connecting the distribution of excess savings across households to the dynamics of aggregate demand. Deficit-financed fiscal transfers generate excess savings. The poorest households with the highest MPCs spend down their excess savings the fastest, increasing other households’ incomes and their excess savings. This leads to a long-lasting increase in aggregate demand until, ultimately, excess savings have “trickled up” to the richest savers with the lowest MPCs, raising wealth inequality.
Published Versions
Adrien Auclert & Matthew Rognlie & Ludwig Straub, 2023. "The Trickling Up of Excess Savings," AEA Papers and Proceedings, vol 113, pages 70-75. citation courtesy of