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"Quick Response" Economic Stimulus: The Effect of Small-Value Digital Coupons on Spending

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  • Jianwei Xing
  • Eric Yongchen Zou
  • Zhentoa Yin
  • Yong Wang
  • Zhenhua Li

Abstract

We study a new consumption stimulus program implemented by a large Chinese city that leverages mobile payment platforms to dispense massive amounts of small-value digital coupons. Exploiting a "rush" design of the dispensing process in which over 1 million program participants compete for coupons on a first-come, first-served basis through a digital portal, we estimate that winning coupons increases weekly out-of-pocket spending by US$3 for every US$1 in government subsidy. Coupon-winning consumers practice intertemporal substitution by moving up purchases that would have been made four months in the future. Customer flow analysis suggests that coupons distort consumption toward pricier options.

Suggested Citation

  • Jianwei Xing & Eric Yongchen Zou & Zhentoa Yin & Yong Wang & Zhenhua Li, 2023. ""Quick Response" Economic Stimulus: The Effect of Small-Value Digital Coupons on Spending," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(4), pages 249-304, October.
    • Handle: RePEc:aea:aejmac:v:15:y:2023:i:4:p:249-304
    DOI: 10.1257/mac.20210148
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    Cited by:

    1. Henrika Langen & Martin Huber, 2022. "How causal machine learning can leverage marketing strategies: Assessing and improving the performance of a coupon campaign," Papers 2204.10820, arXiv.org, revised Jun 2022.

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    More about this item

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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