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Cash for Corollas: When Stimulus Reduces Spending

Mark Hoekstra (), Steven Puller () and Jeremy West ()

American Economic Journal: Applied Economics, 2017, vol. 9, issue 3, 1-35

Abstract: The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which experienced disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show more than half 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 $7,600 less. Thus, we estimate on net the $3 billion program reduced total new vehicle spending by $5 billion.

JEL-codes: E32 E62 E65 H24 H31 L62 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/app.20150172
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Working Paper: Cash for Corollas: When Stimulus Reduces Spending (2014) Downloads
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