Consumer Spending and the Economic Stimulus Payments of 2008

Jonathan Parker, Nicholas S. Souleles, David S. Johnson and Robert McClelland

No 16684, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We measure the response of household spending to the economic stimulus payments (ESPs) disbursed in mid-2008, using special questions added to the Consumer Expenditure Survey and variation arising from the randomized timing of when the payments were disbursed. We find that, on average, households spent about 12-30% (depending on the specification) of their stimulus payments on nondurable expenditures during the three-month period in which the payments were received. Further, there was also a substantial and significant increase in spending on durable goods, in particular vehicles, bringing the average total spending response to about 50-90% of the payments. Relative to research on the 2001 tax rebates, these spending responses are estimated with greater precision using the randomized timing variation. The estimated responses are substantial and significant for older, lower-income, and home-owning households. We find little evidence that the propensity to spend varies with the method of disbursement (paper check versus electronic transfer).

JEL-codes: D12 D14 D91 E21 E62 E65 H24 H31 (search for similar items in EconPapers)
Date: 2011-01
Note: EFG ME PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (63)

Published as Jonathan A. Parker & Nicholas S. Souleles & David S. Johnson & Robert McClelland, 2013. "Consumer Spending and the Economic Stimulus Payments of 2008," American Economic Review, American Economic Association, vol. 103(6), pages 2530-53, October.

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Journal Article: Consumer Spending and the Economic Stimulus Payments of 2008 (2013)
Working Paper: Consumer Spending and the Economic Stimulus Payments of 2008 (2011)
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