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Did the 2008 rebate fail? a response to Taylor and Feldstein

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  • Kenneth Lewis
  • Laurence Seidman

Abstract

Did the 2008 rebate fail to stimulate consumer spending? In their influential American Economic Review articles, John Taylor and Martin Feldstein each claim that Bureau of Economic Analysis (BEA) aggregate time series data show that the 2008 rebate failed. Reexamining 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 microdata studies that the 2008 rebate stimulated consumer spending.

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  • Kenneth Lewis & Laurence Seidman, 2011. "Did the 2008 rebate fail? a response to Taylor and Feldstein," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(2), pages 183-204.
    • Handle: RePEc:mes:postke:v:34:y:2011:i:2:p:183-204
    DOI: 10.2753/PKE0160-3477340201
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    1. 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.
    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.
    3. Martin Feldstein, 2009. "Rethinking the Role of Fiscal Policy," American Economic Review, American Economic Association, vol. 99(2), pages 556-559, May.
    4. 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.
    5. John B. Taylor, 2009. "The Lack of an Empirical Rationale for a Revival of Discretionary Fiscal Policy," American Economic Review, American Economic Association, vol. 99(2), pages 550-555, May.
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    Cited by:

    1. Laurence Seidman, 2013. "Stimulus Without Debt," Challenge, Taylor & Francis Journals, vol. 56(6), pages 38-59.
    2. Laurence Seidman, 2011. "Keynesian Fiscal Stimulus: What Have We Learned from the Great Recession?," Working Papers 11-11, University of Delaware, Department of Economics.
    3. Seidman, Laurence & Lewis, Kenneth, 2015. "Stimulus without debt in a severe recession," Journal of Policy Modeling, Elsevier, vol. 37(6), pages 945-960.
    4. Laurence Seidman, 2011. "Great Depression II," Challenge, Taylor & Francis Journals, vol. 54(1), pages 32-53.
    5. Laurence Seidman, 2012. "Keynesian stimulus versus classical austerity," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(0), pages 77-92.

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    More about this item

    JEL classification:

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

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