Ricardian or Spender Consumers? Evidence from a Taxpayer Survey Questionnaire
AbstractThis paper uses a unique survey questionnaire to assess the impact of the 2002 French tax cut on consumption. I find that the proportion of "spender" consumers as opposed to "Ricardian" consumers is relatively high, with 52.7 per cent of the households declaring that they consume their tax cuts. I also find evidence that the average marginal propensity to consume tax cuts (76.5%) is significantly greater than the average marginal propensity to consume temporary rises in earnings (42.4%). This result is consistent with the PIH. Furthermore, the smaller the tax cut, the greater this gap; and the higher the family earnings, the higher the marginal propensity to consume tax cuts, which invalidates the effect of liquidity constraints on consumption in that context.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 19496.
Date of creation: 18 Dec 2009
Date of revision:
income tax cut; consumption; survey questionnaire; PIH; liquidity constraints.;
Other versions of this item:
- Damien Échevin, 2010. "Ricardian or Spender Consumers? Evidence from a Taxpayer Survey Questionnaire," Economics Bulletin, AccessEcon, vol. 30(2), pages 1526-1538.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-16 (All new papers)
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