Working Paper: NBER ID: w20349
Authors: Mark Hoekstra; Steven L. Puller; Jeremy West
Abstract: The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.
Keywords: Cash for Clunkers; Stimulus; Consumer Spending; Regression Discontinuity
JEL Codes: H3; L5; Q4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cash for Clunkers (CFC) program (H81) | new car purchases (L62) |
| barely eligible households (D10) | new car purchases (L62) |
| CFC program (F53) | total number of vehicle purchases (L62) |
| CFC program (F53) | types of vehicles purchased (L62) |
| CFC program (F53) | spending per vehicle (L62) |
| CFC program (F53) | total new vehicle spending (L62) |
| CFC program (F53) | revenues to the auto industry (L62) |