How Much Did the 2009 Fiscal Stimulus Boost Spending? Evidence from a Household Survey

22 Pages Posted: 19 Oct 2009

See all articles by Andrew Leigh

Andrew Leigh

Australian House of Representatives Parliament House; Centre for Applied Macroeconomic Analysis, ANU; IZA

Date Written: October 14, 2009

Abstract

Using survey evidence, I estimate the impact of a $12 billion package of household payments delivered in Australia between March and May 2009. Forty percent of households who said that they received the payment reported having spent it. This is approximately twice the spending rate that has been recorded in surveys assessing the 2001 and 2008 tax rebates in the United States. One possible explanation for this is that individuals are more likely to spend “bonuses” (as the Australian payments were described) than “rebates” (as the US payments were described). Using an approach for converting spending rates into an aggregate marginal propensity to consume (MPC), the Australian results are consistent with an aggregate MPC of 0.41−0.42. Since this estimate is based only on first-quarter spending, it may be an underestimate of the longer-run impact of the package on consumer expenditure.

Keywords: fiscal stimulus, marginal propensity to consume, household expenditure

JEL Classification: H24, H31

Suggested Citation

Leigh, Andrew, How Much Did the 2009 Fiscal Stimulus Boost Spending? Evidence from a Household Survey (October 14, 2009). Available at SSRN: https://ssrn.com/abstract=1488692 or http://dx.doi.org/10.2139/ssrn.1488692

Andrew Leigh (Contact Author)

Australian House of Representatives Parliament House ( email )

Canberra, 2600
Australia

Centre for Applied Macroeconomic Analysis, ANU ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

IZA ( email )

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