response to a social transfer shock (Monacelli and Perotti, 2011; Coenen et al., 2012; Giambattista and Pennings, 2017; Mehrotra, 2018). The distinctive and essential elements of this family of models are the existence of two types of agents that di¤er in their access to ...nancial markets coupled with a ...scal authority capable of redistributing funds between these two groups of individuals.<sup>3</sup> While unconstrained Ricardian agents have access to ...nancial markets and are, thus, able to smooth consumption, constrained hand-to-mouth (HtM, hereafter) individuals consume their entire income in each period and, consequently, have a higher marginal propensity to consume. The government collects lump-sum taxes from the Ricardian agents to pay for government purchases and social transfers to individuals. Naturally, if social transfers only reached Ricardian agents or if there were no HtM individuals, the STM would be equal to zero. The key to deliver a positive STM relies on social transfers actually reaching HtM individuals (i.e., the social transfer shock needs to redistribute funds from low- to high-marginal-propensity-to-consume agents) along with the existence of HtM agents (who help propagate the e¤ect of the initial social transfer shock). Moreover, TANK models deliver STMs that are larger the higher the share of HtM agents in the population (which increases the average marginal propensity to consume of the economy) and the higher the share of social transfers reaching HtM agents (which increases the redistribution of funds from Ricardian to HtM agents). Among other relevant features, these models also allow monetary policy to be more or less accommodative (the zero lower bound being the extreme case of the former) and ...scal policy to vary the degree of persistence of government spending shocks.

When studying the key determinants a¤ecting the size of STMs, existing papers have focused on the importance of the persistence of the social transfer shock (Coenen et al., 2012; Romer and Romer, 2016; Alesina et al., 2017; Gechert et al., 2020; Pennings, 2020) and on the magnifying role of the more accommodative monetary policy on the STM (Coenen et al., 2012; Romer and Romer, 2016; Giambattista and Pennings, 2017; Mehrotra, 2018). Despite the above-mentioned progress, to the best of our knowledge, no study has focused on how the heterogeneity in the share of HtM agents and in the share of social transfers reaching HtM agents a¤ect the size of STMs. Existing quantitative papers estimating STMs for the United States (Giambattista and Pennings, 2017; Pennings, 2020) discipline the share of HtM agents to one-third based on Kaplan et al. (2014). Kaplan et al. (2014) relied on household surveys for the United States and eight other developed countries to measure the share of HtM agents based on liquid net worth, ...nding modest heterogeneity among developed countries.<sup>4</sup> Notably, no paper uses data to discipline the share of social transfers reaching HtM agents. It is generally assumed that social transfers solely reach HtM agents, which is referred to as perfect social transfers targeting. However, we document that this

> 3 The in‡uential paper by Oh and Reis (2012) was the ...rst to call attention to the need to have heterogeneous agents coupled with redistribution arguments to deliver a positive STM.

> 4 Kaplan et al. (2014) ...nd that the shares of HtM households (expressed in percentage terms) are as follows: Australia (19), Canada (30), France (21), Germany (32), Italy (24), Spain (20), United Kingdom (33), and United States (31).

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