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Abstract

Did the 2008 rebate fail to stimulate consumer spending? In their influential AER articles, John Taylor and Martin Feldstein each claim that BEA aggregate time series data show that the 2008 rebate failed. Re-examining the BEA data, we find that the data instead show there is a high probability that the rebate stimulated consumption. Moreover, the hypothesis that a rebate has half the impact of ordinary disposable income cannot be rejected. Thus, we find that analysis of the BEA aggregate time series data is consistent with the conclusion from the micro-data studies that the 2008 rebate stimulated consumer spending.

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File URL: http://www.lerner.udel.edu/sites/default/files/imce/economics/WorkingPapers/2011/UDWP2011-10.pdf
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Bibliographic Info

Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 11-10.

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Length: 33 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:dlw:wpaper:11-10.

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Postal: Purnell Hall, Newark, Delaware 19716
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Web page: http://www.lerner.udel.edu/departments/economics/
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Related research

Keywords: fiscal policy; fiscal stimulus; tax rebates;

Other versions of this item:

Find related papers by JEL classification:

• E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

This paper has been announced in the following NEP Reports:

• NEP-ALL-2011-08-15 (All new papers)
• NEP-MAC-2011-08-15 (Macroeconomics)

References

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1. David S. Johnson & Jonathan A. Parker & Nicholas S. Souleles, 2004. "Household Expenditure and the Income Tax Rebates of 2001," NBER Working Papers 10784, National Bureau of Economic Research, Inc.
   
   • Nicholas S. Souleles & Jonathan A. Parker & David S. Johnson, 2006. "Household Expenditure and the Income Tax Rebates of 2001," American Economic Review, American Economic Association, vol. 96(5), pages 1589-1610, December.
   • David S. Johnson & Jonathan A. Parker & Nicholas S. Souleles, 2004. "Household Expenditure and the Income Tax Rebates of 2001," Working Papers 136, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
2. Claudia R. Sahm & Matthew D. Shapiro & Joel Slemrod, 2010. "Household Response to the 2008 Tax Rebate: Survey Evidence and Aggregate Implications," NBER Chapters, in: Tax Policy and the Economy, Volume 24, pages 69-110 National Bureau of Economic Research, Inc.
   
   • Claudia R. Sahm & Matthew D. Shapiro & Joel B. Slemrod, 2009. "Household Response to the 2008 Tax Rebate: Survey Evidence and Aggregate Implications," NBER Working Papers 15421, National Bureau of Economic Research, Inc.
   • Claudia R. Sahm & Matthew D. Shapiro & Joel Slemrod, 2009. "Household response to the 2008 tax rebates: survey evidence and aggregate implications," Finance and Economics Discussion Series 2009-45, Board of Governors of the Federal Reserve System (U.S.).

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Cited by:

1. Laurence Seidman, 2011. "Keynesian Fiscal Stimulus: What Have We Learned from the Great Recession?," Working Papers 11-11, University of Delaware, Department of Economics.

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