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Cash for Corollas: When Stimulus Reduces Spending

Mark Hoekstra, Steven Puller (puller@econmail.tamu.edu) and Jeremy West

No 20349, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: H3 L5 Q4 (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-tre
Note: EEE IO PE
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Citations: View citations in EconPapers (12)

Published as Mark Hoekstra & Steven L. Puller & Jeremy West, 2017. "Cash for Corollas: When Stimulus Reduces Spending," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 1-35, July.

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Journal Article: Cash for Corollas: When Stimulus Reduces Spending (2017) Downloads
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