Working Paper: CEPR ID: DP9530
Authors: Kanishka Misra; Paolo Surico
Abstract: Almost half of American families did not adjust their consumption following receipt of the 2001 or 2008 tax rebates. Another 20%, with low income and more likely to rent, spent a small but significant amount. Households with large spending propensity held high mortgage debt. The heterogeneity is concentrated in a few non-durable categories and a handful of `new vehicle' purchases. The predictions of the heterogeneous response model appear far more accurate than their homogeneous response model counterparts, offering new insights on the evaluation of the two fiscal stimulus programmes.
Keywords: Fiscal Policy; Heterogeneity; Stimulus Payments
JEL Codes: D91; E21; E62; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Fiscal stimulus (E62) | Consumption responses (E21) |
| Heterogeneous response model (C21) | Consumption responses (E21) |
| Homogeneous response model (C21) | Consumption responses (E21) |
| Debt levels (H63) | Spending behavior (D12) |
| Household characteristics (D19) | Spending propensity (D12) |
| Stimulus payments (J33) | Total expenditure (H59) |
| 40%-50% of households (R20) | Null effect (C59) |
| Rebate amount (H23) | Consumption responses (E21) |