How Much Did the 2009 Australian Fiscal Stimulus Boost Demand? Evidence from Household-Reported Spending Effects

Andrew Leigh

The B.E. Journal of Macroeconomics, 2012, vol. 12, issue 1, 24

Abstract: Using survey evidence, I estimate the impact of $21 billion in household payments delivered in Australia between December 2008 and May 2009. Forty percent of households who said that they received a payment reported having spent it. This is a higher spending rate than has been recorded in surveys assessing the 2001 and 2008 tax rebates in the United States. One possible explanation for this is that individuals are more likely to spend “bonuses” (as the Australian payments were described) than “rebates” (as the US payments were described). Using an approach for converting spending rates into an aggregate marginal propensity to consume (MPC), the Australian results are consistent with an aggregate MPC of 0.41-0.42. Since this estimate is based largely on first-quarter spending, it may understate the longer-run impact of the package on consumer expenditure.

Keywords: fiscal stimulus; marginal propensity to consume; household expenditure (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1515/1935-1690.2035

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