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Spending effects of fiscal transfers in a pandemic

Author

Listed:
  • Lewis, Vivien
  • Goldfayn-Frank, Olga
  • Wehrhöfer, Nils

Abstract

Are cash transfers to households an effective policy for stimulating demand in a pandemic? We analyze three payments that German parents received as part of the Covid-19 stimulus program. We exploit randomization in the payment dates and daily home scanner data to evaluate the spending response to the transfers. The first transfer had a significant effect on spending, but only in counties with low infection rates. The second and third transfers, which coincided with much higher infection rates, failed to increase spending. Moreover, the transfers increased the number of shop visits, possibly contributing to the spread of the virus.

Suggested Citation

  • Lewis, Vivien & Goldfayn-Frank, Olga & Wehrhöfer, Nils, 2022. "Spending effects of fiscal transfers in a pandemic," CEPR Discussion Papers 17058, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17058
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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