Consumption Responses to Temporary Tax Incentives: Evidence from State Sales Tax Holidays

Sumit Agarwal, Nathan Marwell and Leslie McGranahan

American Economic Journal: Economic Policy, 2017, vol. 9, issue 4, 1-27

Abstract: States offer sales tax holidays (STHs) temporarily exempting items like clothes, shoes, and school supplies from the state sales tax. Spending response to these temporary tax changes are investigated using two datasets: the Diary portion of the Consumer Expenditure Survey and a unique dataset of credit card transactions. Results based on a difference-in-differences methodology show that there are substantial increases in spending on covered goods during these holidays that are not offset by declines in spending before or after the holidays.

JEL-codes: D12 H25 H31 H71 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/pol.20130429
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Citations: View citations in EconPapers (27)

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