Stimulating Savings: An Analysis of Cash Handouts in Australia and the United States

Sinclair Davidson and Ashton de Silva

Agenda - A Journal of Policy Analysis and Reform, 2013, vol. 20, issue 2, 39-60

Abstract: At the onset of the Global Financial Crisis governments around the world implemented fiscal stimulus packages. A key component of many of these packages was aimed at stimulating consumer spending. In Australia and the United States, for example, households received one-off cash payments. We assess the changes in the macroeconomic levels of consumption and savings of both countries coinciding with the timing of the household bonuses using an econometric time series method known as seemingly unrelated time-series equations. The results suggest that the one-off cash bonuses did not stimulate consumption. On the contrary, the evidence suggests savings was stimulated.

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:acb:agenda:v:20:y:2013:i:2:p:39-60

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