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Ricardian or Spender Consumers? Evidence from a Taxpayer Survey Questionnaire

Damien Échevin ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper uses a unique survey questionnaire to assess the impact of the 2002 French tax cut on consumption. I find that the proportion of "spender" consumers as opposed to "Ricardian" consumers is relatively high, with 52.7 per cent of the households declaring that they consume their tax cuts. I also find evidence that the average marginal propensity to consume tax cuts (76.5%) is significantly greater than the average marginal propensity to consume temporary rises in earnings (42.4%). This result is consistent with the PIH. Furthermore, the smaller the tax cut, the greater this gap; and the higher the family earnings, the higher the marginal propensity to consume tax cuts, which invalidates the effect of liquidity constraints on consumption in that context.

Keywords: income tax cut; consumption; survey questionnaire; PIH; liquidity constraints. (search for similar items in EconPapers)
JEL-codes: D12 H31 H24 E21 (search for similar items in EconPapers)
Date: 2009-12-18
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https://mpra.ub.uni-muenchen.de/19496/1/MPRA_paper_19496.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/19581/1/MPRA_paper_19581.pdf revised version (application/pdf)

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Journal Article: Ricardian or Spender Consumers? Evidence from a Taxpayer Survey Questionnaire (2010) Downloads
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