Heterogeneous Responses and Aggregate Impact of the 2001 Income Tax Rebates

Paolo Surico and Kanishka Misra

No 8306, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper estimates the heterogeneous responses to the 2001 income tax rebates across endogenously determined groups of American households. Around 45% of the sample saved the entire value of the rebate. Another 20%, with low income and liquid wealth, spent a significant amount. The largest propensity to consume, however, was associated with the remaining 35% of households, with higher income or liquid wealth. The estimated heterogeneity implies that the tax rebates added a 3.27% to aggregate non-durable consumption expenditure in the second half of 2001. The estimates of the homogeneous response model, in contrast, predict a 5.05% increase.

Keywords: Heterogeneity; Propensity to consume; Fiscal policy (search for similar items in EconPapers)
JEL-codes: D91 E21 E62 H31 (search for similar items in EconPapers)
Date: 2011-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://cepr.org/publications/DP8306 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:8306

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP8306

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().