Consumption, Income Changes and Heterogeneity: Evidence from Two Fiscal Stimulus Programmes

36 Pages Posted: 2 Jul 2013

See all articles by Kanishka Misra

Kanishka Misra

London Business School

Paolo Surico

London Business School - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: June 2013

Abstract

Almost half of American families did not adjust their consumption following receipt of the 2001 or 2008 tax rebates. Another 20%, with low income and more likely to rent, spent a small but significant amount. Households with large spending propensity held high mortgage debt. The heterogeneity is concentrated in a few non-durable categories and a handful of 'new vehicle' purchases. The predictions of the heterogeneous response model appear far more accurate than their homogeneous response model counterparts, offering new insights on the evaluation of the two fiscal stimulus programmes.

Keywords: fiscal policy, heterogeneity, stimulus payments

JEL Classification: D91, E21, E62, H31

Suggested Citation

Misra, Kanishka and Surico, Paolo, Consumption, Income Changes and Heterogeneity: Evidence from Two Fiscal Stimulus Programmes (June 2013). CEPR Discussion Paper No. DP9530. Available at SSRN: https://ssrn.com/abstract=2288495

Kanishka Misra (Contact Author)

London Business School ( email )

Paolo Surico

London Business School - Department of Economics ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom

HOME PAGE: http://sites.google.com/site/paolosurico

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

HOME PAGE: http://sites.google.com/site/paolosurico

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