Did the 2008 Tax Rebates Stimulate Spending?
14 Pages Posted: 26 Feb 2009 Last revised: 26 Oct 2022
Date Written: February 2009
Abstract
Only one-fifth of respondents to a rider on the University of Michigan Survey Research Center's Monthly Survey said that the 2008 tax rebates would lead them to mostly increase spending. Almost half said the rebate would mostly lead them to pay off debt, while about a third saying it would lead them mostly to save more. The survey responses imply that the aggregate propensity to spend from the rebate was about one-third, and that there would not be substantially more spending as a lagged effect of the rebates. Because of the low spending propensity, the rebates in 2008 provided low "bang for the buck" as economic stimulus. Putting cash into the hands of the consumers who use it to save or pay off debt boosts their well-being, but it does not necessarily make them spend. Low-income individuals were particularly likely to use the rebate to pay off debt.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Consumer Response to the Timing of Income: Evidence from a Change in Tax Withholding
-
Household Expenditure and the Income Tax Rebates of 2001
By David Johnson, Jonathan A. Parker, ...
-
Household Expenditure and the Income Tax Rebates of 2001
By David Johnson, Jonathan A. Parker, ...
-
The Reaction of Consumer Spending and Debt to Tax Rebates - Evidence from Consumer Credit Data
By Sumit Agarwal, Chunlin Liu, ...
-
The Reaction of Consumer Spending and Debt to Tax Rebates -- Evidence from Consumer Credit Data
By Sumit Agarwal, Chunlin Liu, ...
-
'3rd of Tha Month': Do Social Security Recipients Smooth Consumption between Checks?
-
Did the 2001 Tax Rebate Stimulate Spending? Evidence from Taxpayer Surveys
-
Is There a Daily Discount Rate? Evidence from the Food Stamp Nutrition Cycle