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

38 Pages Posted: 19 May 2014

See all articles by Christian M. Broda

Christian M. Broda

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

Jonathan A. Parker

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

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Date Written: May 2014

Abstract

Using a survey of households in the Nielsen Consumer Panel and the randomized timing of disbursement of the 2008 Economic Stimulus Payments, we find that a 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. Our 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.

Suggested Citation

Broda, Christian M. and Parker, Jonathan A., The Economic Stimulus Payments of 2008 and the Aggregate Demand for Consumption (May 2014). NBER Working Paper No. w20122, Available at SSRN: https://ssrn.com/abstract=2438543

Christian M. Broda (Contact Author)

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Jonathan A. Parker

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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