Did the Shopping Coupon Program Stimulate Consumption? Evidence from Japanese Micro Data

In March, 1999, the Japanese Government handed out "shopping coupons" worth 20,000 yen (about 200 dollars) to families for every child under the age of 15 and to roughly half of Japan's elderly population. In total, 25 percent of Japan's population received the coupons. The coupons expired after six months and had to be spent within the recipient's local community. We use variation in the impact of the program across families with different numbers of children and variation across prefectures to identify its impact on consumption. We control for "normal" seasonal patterns of consumption across families and prefectures by comparing the seasonal variation in consumption in the spring of 1999 with that in previous years when the coupons were not distributed. Our two sets of difference-in-difference estimates suggest that the MPC out of the coupons ranged between 0.2-0.3 in the first month the coupons were distributed. However, families that received coupons spent less in subsequent months, so the MPC falls to 0.1 when we measure the change in consumption over the next 3 or 4 months.