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How Much Did the 2009 Australian Fiscal Stimulus Boost Demand? Evidence from Household-Reported Spending Effects

Listed author(s):
  • Leigh Andrew

    ()

    (Australian National University)

Using survey evidence, I estimate the impact of $21 billion in household payments delivered in Australia between December 2008 and May 2009. Forty percent of households who said that they received a payment reported having spent it. This is a higher spending rate than has been recorded in surveys assessing the 2001 and 2008 tax rebates in the United States. One possible explanation for this is that individuals are more likely to spend “bonuses” (as the Australian payments were described) than “rebates” (as the US payments were described). Using an approach for converting spending rates into an aggregate marginal propensity to consume (MPC), the Australian results are consistent with an aggregate MPC of 0.41-0.42. Since this estimate is based largely on first-quarter spending, it may understate the longer-run impact of the package on consumer expenditure.

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File URL: https://www.degruyter.com/view/j/bejm.2012.12.issue-1/1935-1690.2035/1935-1690.2035.xml?format=INT
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Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 12 (2012)
Issue (Month): 1 (March)
Pages: 1-24

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Handle: RePEc:bpj:bejmac:v:12:y:2012:i:1:n:4
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  1. Tullio Jappelli & Luigi Pistaferri, 2010. "The Consumption Response to Income Changes," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 479-506, 09.
  2. Richard H. Thaler & Shlomo Benartzi, 2004. "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 164-187, February.
  3. Matthew D. Shapiro & Joel Slemrod, 2009. "Did the 2008 Tax Rebates Stimulate Spending?," American Economic Review, American Economic Association, vol. 99(2), pages 374-379, May.
  4. 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.
  5. Matthew D. Shapiro & Joel Slemrod, 2003. "Did the 2001 Tax Rebate Stimulate Spending? Evidence from Taxpayer Surveys," NBER Chapters,in: Tax Policy and the Economy, Volume 17, pages 83-110 National Bureau of Economic Research, Inc.
  6. Shlomo Benartzi & Richard Thaler, 2004. "Save more tomorrow: Using behavioral economics to increase employee saving," Natural Field Experiments 00337, The Field Experiments Website.
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