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The Effect of Tax Rebates on Consumption Expenditures: Evidence From State Tax Rebates

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  • Heim, Bradley T.

Abstract

This paper uses Consumer Expenditure Survey data to estimate the response to a sequence of state tax rebates implemented during 1995–2001. The results generally suggest that expenditures increased by one–fifth to one–fourth of the rebate amount, with positive effects on nondurable spending, spending on apparel, and among households with single respondents. However, the results vary depending on the sample, regressor, and expenditure component, with several variables entering insignificantly or with the wrong sign. Rebate announcements are estimated to have had a small and insignificant effect on the amount of spending, but may have shifted the composition of spending.

Suggested Citation

  • Heim, Bradley T., 2007. "The Effect of Tax Rebates on Consumption Expenditures: Evidence From State Tax Rebates," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(4), pages 685-710, December.
  • Handle: RePEc:ntj:journl:v:60:y:2007:i:4:p:685-710
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    Cited by:

    1. Karel Mertens & Morten Overgaard Ravn, 2011. "Understanding the Aggregate Effects of Anticipated and Unanticipated Tax Policy Shocks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(1), pages 27-54, January.
    2. Karel Mertens & Morten O. Ravn, 2012. "Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated US Tax Policy Shocks," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 145-181, May.
    3. Karel Mertens & Morten Overgaard Ravn, 2011. "Understanding the Aggregate Effects of Anticipated and Unanticipated Tax Policy Shocks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(1), pages 27-54, January.

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