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Lottery tax windfalls, state-level fiscal policy, and consumption

Author

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  • Da, Zhi
  • Warachka, Mitch
  • Yun, Hayong

Abstract

We find that lottery tax windfalls finance higher state-government expenditures on supplemental security income that increase consumption, but only during bust periods. Wealth transfers from lottery winners to low income households enable fiscal policy to stabilize consumption during bust periods.

Suggested Citation

  • Da, Zhi & Warachka, Mitch & Yun, Hayong, 2015. "Lottery tax windfalls, state-level fiscal policy, and consumption," Economics Letters, Elsevier, vol. 129(C), pages 9-12.
    • Handle: RePEc:eee:ecolet:v:129:y:2015:i:c:p:9-12
    DOI: 10.1016/j.econlet.2015.01.028
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    References listed on IDEAS

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    1. Jonathan A. Parker, 2011. "On Measuring the Effects of Fiscal Policy in Recessions," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 703-718, September.
    2. Charlotte Ostergaard & Bent E. Serensen & Oved Yosha, 2002. "Consumption and Aggregate Constraints: Evidence from U.S. States and Canadian Provinces," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 634-645, June.
    3. George M. Korniotis, 2008. "Habit Formation, Incomplete Markets, and the Significance of Regional Risk for Expected Returns," The Review of Financial Studies, Society for Financial Studies, vol. 21(5), pages 2139-2172, September.
    4. Jeffrey Clemens & Stephen Miran, 2012. "Fiscal Policy Multipliers on Subnational Government Spending," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 46-68, May.
    5. Gary A. Wagner & Erick M. Elder, 2005. "The Role of Budget Stabilization Funds in Smoothing Government Expenditures over the Business Cycle," Public Finance Review, , vol. 33(4), pages 439-465, July.
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    Cited by:

    1. DragoÈ™ Mihai UNGUREANU & Elena-Doina DASCALU, 2015. "Tax Lottery Receipts in Romania, a Different Approach to Fight against Tax Evasion," International Conference on Economic Sciences and Business Administration, Spiru Haret University, vol. 2(1), pages 267-275, December.
    2. Dragos Mihai UNGUREANU & Elena-Doina DASCALU, 2015. "Improving VAT Compliance in Romania by Implementing a New Tool - Tax Lottery Receipts," Journal of Economic Development, Environment and People, Alliance of Central-Eastern European Universities, vol. 4(4), pages 47-57, December.
    3. Xu, Yonghao & Meng, Juanjuan & Zhang, Yu & Koo, Jeffrey, 2021. "How household consumption responds to credit card refunds," Economics Letters, Elsevier, vol. 198(C).

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    More about this item

    Keywords

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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