Consumer Spending and the Economic Stimulus Payments of 2008

By Jonathan A. Parker, Nicholas S. Souleles, David S. Johnson, Robert McClelland. 2013

809 citations recorded by the source corpus.

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).

Subfields: Accounting, Economics and Econometrics, Gender Studies

View Paper: https://www.semanticscholar.org/paper/3d9876f7010db4b8ba3f192ea37df27127ddc846

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Citations in the corpus

Monetary Policy According to HANK (2018, background): “…quarterly marginal propensity to consume out of unanticipated, transitory, small government transfers of around 25 percent (Johnson et al., 2006; Parker et al., 2013) and (ii) a vast heterogeneity in consumption responses across the population which is largely driven by the level and…”
On Measuring the Effects of Fiscal Policy in Recessions (2011, neutral): “Souleles (2006) and Parker et al. (2011) estimate the effect”
When Inequality Matters for Macro and Macro Matters for Inequality (2018, positive): “5%, in line with the empirical estimates of Johnson, Parker and Souleles (2006) and Parker et al. (2013). The average number is composed of high MPCs for hand-tomouth households (around 0.”
MPC Heterogeneity and Household Balance Sheets (2016, positive): “In the tax rebate literature, Johnson et al. (2006) and Parker et al. (2013) find that households spend between 0.50 and 0.90 per dollar received on total consumption.”
Monetary Policy Pass-Through: Household Consumption and Voluntary Deleveraging (2014, methodology): “5Evidence of financing constraints at the household level has been widely documented by, among others, Zeldes (1989), Jappelli and Pagano (1989), Campbell and Mankiw (1989), and Carroll and Dunn (1997).”