Cash for Corollas: When Stimulus Reduces Spending

Mark Hoekstra, Steven L Puller and Jeremy West

Santa Cruz Department of Economics, Working Paper Series from Department of Economics, UC Santa Cruz

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 E32, E62, E65, H24, H31, L62)

Keywords: Economics; Applied Economics; Affordable and Clean Energy; Applied economics (search for similar items in EconPapers)
Date: 2017-07-01
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Cash for Corollas: When Stimulus Reduces Spending (2017)
Working Paper: Cash for Corollas: When Stimulus Reduces Spending (2014)
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