Spending response to cash transfers to shield households from inflation: Evidence from bank accounts

We use daily data from a large Spanish financial institution to analyze the spending responses to a one-off cash transfer to mitigate the impact of the surge in inflation during the 2022–2023 period. Using a staggered difference-in-differences estimator robust to treatment effect heterogeneity, we find that most of the expenditure is concentrated around the date of the transfer and that the average marginal propensity to spend is around 30%. The results are robust to changes in the main specification. •Many countries used cash transfers to support real incomes during the surge of inflation of 2021–22.•The impact of these cash transfers on expenditure was concentrated around the day of the transfer.•The average propensity to spend out of the cash transfers is around 30%.