Check in the Mail or More in the Paycheck: Does the Effectiveness of Fiscal Stimulus Depend on How it is Delivered?
Federal Reserve Board
Matthew D. Shapiro
University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)
Joel B. Slemrod
University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)
NBER Working Paper No. w16246
Recent fiscal policies, including the 2008 stimulus payments and the 2009 Making Work Pay tax credit, aimed to increase household spending. This paper quantifies the spending response to these policies and examines differences in spending by whether the stimulus was delivered as a one-time payment or as a flow of payments from reduced withholding. Based on responses from a representative sample of households in the Thomson Reuters/University of Michigan Surveys of Consumers, the paper finds that the reduction in withholding in 2009 boosted spending at roughly half the rate (13 percent) as the one-time payments (25 percent) in 2008.
Number of Pages in PDF File: 52
Date posted: August 2, 2010
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