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Cash for Corollas: When Stimulus Reduces Spending

Listed author(s):
  • Mark Hoekstra
  • Steven L. Puller
  • Jeremy West

The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.

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File URL: http://www.nber.org/papers/w20349.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 20349.

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Date of creation: Jul 2014
Publication status: published as Mark Hoekstra & Steven L. Puller & Jeremy West, 2017. "Cash for Corollas: When Stimulus Reduces Spending," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 1-35, July.
Handle: RePEc:nbr:nberwo:20349
Note: EEE IO PE
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