Working Paper: NBER ID: w16246
Authors: Claudia R. Sahm; Matthew D. Shapiro; Joel Slemrod
Abstract: Recent fiscal policies, including the 2008 stimulus payments and the 2009 Making Work Pay tax credit, aimed to increase household spending. This paper quantifies the spending response to these policies and examines differences in spending by whether the stimulus was delivered as a one-time payment or as a flow of payments from reduced withholding. Based on responses from a representative sample of households in the Thomson Reuters/University of Michigan Surveys of Consumers, the paper finds that the reduction in withholding in 2009 boosted spending at roughly half the rate (13 percent) as the one-time payments (25 percent) in 2008.
Keywords: fiscal stimulus; household spending; delivery mechanisms
JEL Codes: C83; E62; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| delivery mechanism of fiscal stimulus (E62) | household spending response (D12) |
| 2009 reduction in withholding (H26) | household spending response (D12) |
| 2008 onetime payments (J33) | household spending response (D12) |
| 2009 tax credit (H20) | household spending response (D12) |
| nature of payment mechanism (E42) | household spending response (D12) |
| worsening economic conditions (E66) | household spending response (D12) |
| visibility and perceived impact of payment method (F69) | household spending response (D12) |