Abstract

http://ssrn.com/abstract=1670759
 
 

References (23)



 
 

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The Effects of Fiscal Stimulus: Evidence from the 2009 ‘Cash for Clunkers’ Program


Atif R. Mian


Princeton University - Department of Economics; Princeton University - Woodrow Wilson School of Public and International Affairs; NBER

Amir Sufi


University of Chicago - Booth School of Business; NBER

September 1, 2010


Abstract:     
A key rationale for fiscal stimulus is to boost consumption when aggregate demand is perceived to be inefficiently low. We examine the ability of the government to increase consumption by evaluating the impact of the 2009 “Cash for Clunkers” program on short and medium run auto purchases. Our empirical strategy exploits variation across U.S. cities in ex-ante exposure to the program as measured by the number of “clunkers” in the city as of the summer of 2008. We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended. The effect of the program on auto purchases was significantly more short-lived than previously suggested. We also find no evidence of an effect on employment, house prices, or household default rates in cities with higher exposure to the program.

Number of Pages in PDF File: 44

Keywords: cash for clunkers, fiscal stimulus, durable goods, auto sales, rebates

JEL Classification: E30, E32, E60, E62

working papers series


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Date posted: September 5, 2010  

Suggested Citation

Mian, Atif R. and Sufi, Amir, The Effects of Fiscal Stimulus: Evidence from the 2009 ‘Cash for Clunkers’ Program (September 1, 2010). Available at SSRN: http://ssrn.com/abstract=1670759 or http://dx.doi.org/10.2139/ssrn.1670759

Contact Information

Atif R. Mian
Princeton University - Department of Economics ( email )
Princeton, NJ 08544-1021
United States
Princeton University - Woodrow Wilson School of Public and International Affairs ( email )
Princeton University
Princeton, NJ 08544-1021
United States
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Amir Sufi (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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