The effect of tax changes on consumer spending
AbstractMany supporters of the tax cut enacted this summer viewed it as an important stimulus to consumer spending. But an analysis of the effects of earlier income tax cuts suggests that the consumer response to such initiatives is, in fact, quite variable. Two conclusions stand out: First, consumers will be more likely to boost spending if the change in tax liabilities is permanent. Second, consumers will wait to increase spending until a tax change affects their take-home pay.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Federal Reserve Bank of New York in its journal Current Issues in Economics and Finance.
Volume (Year): 7 (2001)
Issue (Month): Dec ()
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nicholas S. Souleles, 1999. "The Response of Household Consumption to Income Tax Refunds," American Economic Review, American Economic Association, vol. 89(4), pages 947-958, September.
- Eisner, Robert, 1971. "What Went Wrong?," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 629-41, May-June.
- Blinder, Alan S, 1981.
"Temporary Income Taxes and Consumer Spending,"
Journal of Political Economy,
University of Chicago Press, vol. 89(1), pages 26-53, February.
- David W. Wilcox, 1987.
"Social security benefits, consumption expenditure, and the life cycle hypothesis,"
Working Paper Series / Economic Activity Section
78, Board of Governors of the Federal Reserve System (U.S.).
- Wilcox, David W, 1989. "Social Security Benefits, Consumption Expenditure, and the Life Cycle Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 288-304, April.
- Campbell, John Y & Mankiw, N Gregory, 1990.
"Permanent Income, Current Income, and Consumption,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 8(3), pages 265-79, July.
- John Y. Campbell & N. Gregory Mankiw, 1991. "Permanent Income, Current Income, and Consumption," NBER Working Papers 2436, National Bureau of Economic Research, Inc.
- Campbell, John Y. & Mankiw, N. Gregory, 1990. "Permanent Income, Current Income, and Consumption," Scholarly Articles 3353762, Harvard University Department of Economics.
- Richard Peach & Charles Steindel, 2000. "A nation of spendthrifts? An analysis of trends in personal and gross saving," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 6(Sep).
- Jonathan A. Parker, 1999. "The Reaction of Household Consumption to Predictable Changes in Social Security Taxes," American Economic Review, American Economic Association, vol. 89(4), pages 959-973, September.
- James Alm & Asmaa El-Ganainy, 2012.
"Value-added Taxation and Consumption,"
1203, Tulane University, Department of Economics.
- Brigitte Desroches & Marc-André Gosselin, 2002. "The Usefulness of Consumer Confidence Indexes in the United States," Working Papers 02-22, Bank of Canada.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Farber).
If references are entirely missing, you can add them using this form.