Consumer-Financed Fiscal Stimulus: Evidence from Digital Coupons in China

Jing Ding, Lei Jiang, Lucy Msall and Matthew Notowidigdo

No 32376, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In 2020, local governments in China began issuing digital coupons to stimulate spending in targeted categories such as restaurants and supermarkets. Using data from a large e-commerce platform and a bunching estimation approach, we find that the coupons caused large increases in spending of 3.1–3.3 yuan per yuan spent by the government. The large spending responses do not come from substitution away from non-targeted spending categories or from short-run intertemporal substitution. To rationalize these results, we develop a dynamic consumption model showing how coupons’ minimum spending thresholds create temporary notches that lead to large spending responses.

JEL-codes: E21 G50 H30 (search for similar items in EconPapers)
Date: 2024-04
New Economics Papers: this item is included in nep-cna and nep-pub
Note: PE
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