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Do Temporary Cash Transfers Stimulate the Macroeconomy? Evidence from Four Case Studies

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  • Ramey, Valerie

Abstract

This paper re-evaluates the effectiveness of temporary transfers in stimulating the macroeconomy using evidence from four case studies. The rebirth of Keynesian stabilization policy has lingering costs in terms of higher debt paths, so it is important to assess the benefits of these policies. In each case study, I analyze whether the behavior of the aggregate data is consistent with the transfers providing an effective stimulus. Two of the case studies are reviews of evidence from my recent work on the 2001 and 2008 U.S. tax rebates. The other two case studies are new analyses of temporary transfers in Singapore and Australia. In all four instances, the evidence suggests that temporary cash transfers to households likely provided little or no stimulus to the macroeconomy.

Suggested Citation

  • Ramey, Valerie, 2025. "Do Temporary Cash Transfers Stimulate the Macroeconomy? Evidence from Four Case Studies," CEPR Discussion Papers 19943, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:19943
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    Cited by:

    1. is not listed on IDEAS
    2. Vasileios Karaferis, 2025. "Inequality, Labour Market Dynamics and the Policy Mix: Insights from a FLANK," Edinburgh School of Economics Discussion Paper Series 319, Edinburgh School of Economics, University of Edinburgh.
    3. Karen Dynan & Douglas Elmendorf, 2026. "Lessons for Automatic Fiscal Stabilizers from the Great Recession and the COVID-19 Recession," Tax Policy and the Economy, University of Chicago Press, vol. 40(1), pages 1-45.
    4. Naoya Nagasaka, 2026. "Identifying Macro Shocks from Micro Evidence: A Mixed Autoregressive Approach," Discussion Paper Series DP2026-18, Research Institute for Economics & Business Administration, Kobe University.

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    Keywords

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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