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A Test of the Permanent Income Hypothesis When Households are Less Constrained

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  • EMMA AISBETT
  • MARKUS BRUECKNER
  • RALF STEINHAUSER
  • RHETT WILCOX

Abstract

In 2009, the Australian Government delivered approximately $8 billion in direct payments to households. These payments were randomly allocated over a 5‐week period. Panel model estimates show that for the average household, there was no significant disbursement effect on nondurable consumption. Only for relatively young and low‐income households, for example, at the bottom 10th percentile of each, was there a significant positive effect of the tax bonus payment on nondurable consumption. We argue the null findings on average could be due to macroeconomic and institutional differences leaving Australian households less constrained than their U.S. counterparts.

Suggested Citation

  • Emma Aisbett & Markus Brueckner & Ralf Steinhauser & Rhett Wilcox, 2025. "A Test of the Permanent Income Hypothesis When Households are Less Constrained," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 57(5), pages 1335-1360, August.
    • Handle: RePEc:wly:jmoncb:v:57:y:2025:i:5:p:1335-1360
    DOI: 10.1111/jmcb.13124
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