IDEAS home Printed from
   My bibliography  Save this article

A Temporary Tax Rebate in a Recession: Is it Effective and Safe?


  • Laurence S Seidman
  • Kenneth A Lewis


Is a temporary tax rebate effective and safe as an antirecession policy? Simulations with an empirically tested macroeconometric model are used to estimate the impact of the actual one-time 2001 tax rebate in the United States and of a hypothetical rebate twice as large, injected four times (quarterly). The results of the simulations are interpreted in light of two important recent empirical studies of the spending of the 2001 rebate by households. We estimate that a rebate equal to three percent of quarterly GDP (roughly the size of the 2001 rebate) repeated four times (quarterly) would reduce the unemployment rate at the end of a year by one percentage point (for example, from six percent to five percent). As along as a tax rebate is detriggered when the recession ends, its use during a recession does not pose a significant debt or inflation problem.Business Economics (2006) 41, 30–39; doi:10.2145/20060303

Suggested Citation

  • Laurence S Seidman & Kenneth A Lewis, 2006. "A Temporary Tax Rebate in a Recession: Is it Effective and Safe?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 41(3), pages 30-39, July.
  • Handle: RePEc:pal:buseco:v:41:y:2006:i:3:p:30-39

    Download full text from publisher

    File URL:
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.

    File URL:
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Laurence Seidman, 2006. "Learning About Bernanke," Challenge, Taylor & Francis Journals, vol. 49(5), pages 19-32.
    2. Lewis, Kenneth A. & Seidman, Laurence S., 2008. "Overcoming the zero interest-rate bound: A quantitative prescription," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 751-760.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:buseco:v:41:y:2006:i:3:p:30-39. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.