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

Listed author(s):
  • Kenneth A. Lewis
  • Laurence S. Seidman

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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Article provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.

Volume (Year): 34 (2011)
Issue (Month): 2 (January)
Pages: 183-204

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Handle: RePEc:mes:postke:v:34:y:2011:i:2:p:183-204
Contact details of provider: Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348

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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.
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