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The Sentimental Propagation of Lottery Winnings: Evidence from the Spanish Christmas Lottery

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  • Ghomi Avili, Morteza
  • Micó-Millán, Isabel
  • Pappa, Evi

Abstract

We leverage a unique natural experiment, the Spanish Christmas lottery, to investigate the impact of highly geographically clustered winnings on macroeconomic aggregates, and on sentiment and durable consumption, using survey evidence. Lottery winnings induce significant demand effects, especially during recessions, reducing unemployment and increasing job creation and CPI prices. Albeit not receiving wins, households in winning provinces become more optimistic on impact and significantly increase their durable consumption (for furniture and vehicles) six months after the shock. We propose this lottery as an unconventional fiscal policy tool for increasing aggregate revenues and stimulating local demand without crowding out aggregate activity.

Suggested Citation

  • Ghomi Avili, Morteza & Micó-Millán, Isabel & Pappa, Evi, 2022. "The Sentimental Propagation of Lottery Winnings: Evidence from the Spanish Christmas Lottery," CEPR Discussion Papers 17173, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17173
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    Cited by:

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    More about this item

    Keywords

    Randomized natural experiment; Transitory income shocks; Sentiment and consumption responses;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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