Fiscal Stimulus and Households’ Non-Durable Consumption Expenditures: Evidence from the 2009 Australian Nation Building and Jobs Plan

34 Pages Posted: 1 Feb 2014

See all articles by Emma Aisbett

Emma Aisbett

ANU - School of Regulation and Global Governance

Markus Brueckner

National University of Singapore (NUS)

Ralf Steinhauser

Universit at Hamburg; Research School of Economics

Date Written: December 30, 2013

Abstract

In 2009 the Australian government delivered approximately $8 billion in direct payments to households. These payments were pre- announced and randomly allocated to households based on postal codes over a 5-week period. We exploit this random allocation to estimate the causal response of households' non-durable consumption expenditures to a transitory, anticipated income increase. Our main findings are that: (i) non-durable consumption expenditures did not react significantly during or after the one-time, pre-announced transfer; (ii) there is a small, albeit statistically significant increase in non-durable consumption expenditures at the time of the announcement of the fiscal stimulus.

Keywords: Fiscal Stimulus, Randomization, Transitory Income, Anticipation, Excess Sensitivity, Rational Expectations Permanent Income Hypothesis

JEL Classification: E62, E21, H31, D91

Suggested Citation

Aisbett, Emma and Brueckner, Markus and Steinhauser, Ralf, Fiscal Stimulus and Households’ Non-Durable Consumption Expenditures: Evidence from the 2009 Australian Nation Building and Jobs Plan (December 30, 2013). Crawford School Research Paper No. 14-02. Available at SSRN: https://ssrn.com/abstract=2388482 or http://dx.doi.org/10.2139/ssrn.2388482

Emma Aisbett (Contact Author)

ANU - School of Regulation and Global Governance ( email )

Canberra, Australian Capital Territory 2601
Australia

Markus Brueckner

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

Ralf Steinhauser

Universit at Hamburg ( email )

Welckerstr. 8,
Hamburg, Hamburg 20354
Germany

HOME PAGE: http://www.wiso.uni-hamburg.de/professuren/vwl-wachstum-umwelt-und-ressourcen/

Research School of Economics ( email )

Arndt Building 25a
Canberra, Australian Capital Territory 0200
Australia
0261254667 (Phone)

HOME PAGE: http://rse.anu.edu.au/people/people.php?ID=950

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