The Economic Stimulus Payments of 2008 and the Aggregate Demand for Consumption

39 Pages Posted: 3 May 2014 Last revised: 28 Aug 2016

See all articles by Jonathan A. Parker

Jonathan A. Parker

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Christian M. Broda

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

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Date Written: April 24, 2014

Abstract

Households in the Nielsen Consumer Panel were surveyed about their 2008 Economic Stimulus Payment. In estimates identified by the randomized timing of disbursement, the average household’s spending rose by ten percent the week it received a Payment and remained high cumulating to 1.5–3.8 percent of spending over three months. These estimates imply partial-equilibrium increases in aggregate demand of 1.3 percent of consumption in the second quarter of 2008 and 0.6 percent in the third. Spending is concentrated among households with low wealth or low past income; a household’s spending did not increase significantly when it learned about its Payment.

Keywords: Consumption, stabilization, tax policy

JEL Classification: E62, D91, E21, D12

Suggested Citation

Parker, Jonathan A. and Broda, Christian M., The Economic Stimulus Payments of 2008 and the Aggregate Demand for Consumption (April 24, 2014). Kilts Center for Marketing at Chicago Booth – Nielsen Dataset Paper Series 1-005, Available at SSRN: https://ssrn.com/abstract=2431831 or http://dx.doi.org/10.2139/ssrn.2431831

Jonathan A. Parker (Contact Author)

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Christian M. Broda

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