 Spend as you were told: Evidence from labeled COVID-19 stimulus payments in South KoreaSeonghoon Kim, Kanghyock Koh and Wonjun Lyou Journal of Public Economics, 2023, vol. 221, issue C Abstract: We test the income fungibility assumption from standard economic theory by analyzing spending responses to South Korea’s labeled COVID-19 stimulus payments. We exploit unique policy rules for identification: (1) recipients cannot use payments outside their province of residence, and (2) they can only use payments at establishments in pre-specified sectors. Using data on card transactions in Seoul, we find that households do not consider stimulus payments fungible. Compared to Seoul residents’ benchmark spending responses to cash income gains by sector, the stimulus payments disproportionately increased Seoul residents’ spending in the allowed sector compared to the non-allowed sector. The payments did not increase non-Seoul residents’ card spending. Our results imply that labeled stimulus payments with usage restrictions can boost household consumption spending in targeted sectors or locations during economic recessions. Keywords: Income fungibility; COVID-19 stimulus payments; Spending; Card transaction data (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:221:y:2023:i:c:s004727272300049x DOI: 10.1016/j.jpubeco.2023.104867 Access Statistics for this article Journal of Public Economics is currently edited by R. Boadway and J. Poterba More articles in Journal of Public Economics from Elsevier |
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