In the Driver's Seat: Pandemic Fiscal Stimulus and Light Vehicles

Jack Dunbar, Christopher J. Kurz, Geng Li and Maria D. Tito
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Christopher J. Kurz: https://www.federalreserve.gov/econres/christopher-j-kurz.htm
Maria D. Tito: https://www.federalreserve.gov/econres/maria-d-tito.htm

No 2024-013, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper explores the impact of two fiscal programs, the Economic Impact Payments and the Paycheck Protection Program, on vehicle purchases and relates our findings to post-pandemic price pressures. We find that receiving a stimulus check increased the probability of purchasing new vehicles. In addition, the disbursement of funds from the Paycheck Protection Program was associated with a rise in local new car registrations. Our estimates indicate that these two programs account for a boost of 1 3/4 million units -- or 12 percent -- to new car sales in 2020. Furthermore, the induced boost in sales coincided with the presence of significant production constraints and exacerbated an inventory drawdown, thereby contributing to the rapid increase in new vehicle prices that prevailed in the subsequent years.

Keywords: Discretionary Fiscal Policy; Light Vehicle Purchases; Inflation (search for similar items in EconPapers)
JEL-codes: E21 E31 G31 G51 H24 H31 (search for similar items in EconPapers)
Pages: 28 p.
Date: 2024-03-22
New Economics Papers: this item is included in nep-tre and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2024-13

DOI: 10.17016/FEDS.2024.013

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