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Fiscal stimulus and debt burden: evidence from Thailand’s first-car-buyer tax rebate program

Author

Listed:
  • Athiphat Muthitacharoen

    (Chulalongkorn University)

  • Krislert Samphantharak

    (University of California San Diego)

  • Sommarat Chantarat

    (Bank of Thailand)

Abstract

This paper examines the extent to which a fiscal stimulus involving durable goods induces financial distress and causes debt burden. Using account-level loan data to study the impact of Thailand’s first-car-buyer tax rebate scheme at both individual and postcode levels, we find that the program led to higher loan delinquency and crowded out other loan originations, which are symptoms implied by excessive debt burden. The adverse impacts were more pronounced for passenger car buyers than for truck buyers and there were local negative spillovers to non-participants. Our findings raise questions about the merit of promoting economic growth by inducing debt-fueled spending and suggest that the design of durable goods stimulus policy should focus more on productive business durables than on consumer durables.

Suggested Citation

  • Athiphat Muthitacharoen & Krislert Samphantharak & Sommarat Chantarat, 2019. "Fiscal stimulus and debt burden: evidence from Thailand’s first-car-buyer tax rebate program," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(6), pages 1383-1415, December.
    • Handle: RePEc:kap:itaxpf:v:26:y:2019:i:6:d:10.1007_s10797-019-09549-6
    DOI: 10.1007/s10797-019-09549-6
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    References listed on IDEAS

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    Cited by:

    1. Athiphat Muthitacharoen & Athiphat Muthitacharoen, 2023. "Digital Fiscal Stimulus and SMEs: Insights from Thailand's Half and Half Program," CESifo Working Paper Series 10711, CESifo.

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    More about this item

    Keywords

    Fiscal stimulus; Debt burden; Tax rebate; Durable goods; Household debt; Delinquency; Credit bureau data;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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