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Cash for Corollas: When Stimulus Reduces Spending

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Listed:
  • Mark Hoekstra
  • Steven L. Puller
  • Jeremy West

Abstract

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.

Suggested Citation

  • Mark Hoekstra & Steven L. Puller & Jeremy West, 2014. "Cash for Corollas: When Stimulus Reduces Spending," NBER Working Papers 20349, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20349
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Nicholas J. Sanders & Ryan Sandler, 2017. "Technology and the Effectiveness of Regulatory Programs Over Time: Vehicle Emissions and Smog Checks with a Changing Fleet," NBER Working Papers 23966, National Bureau of Economic Research, Inc.
    2. 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.
    3. Yu-Chin Hsu & Chung-Ming Kuan & Giorgio Teng-Yu Lo, 2017. "Quantile Treatment Effects in Regression Discontinuity Designs with Covariates," IEAS Working Paper : academic research 17-A009, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    4. Klößner, Stefan & Pfeifer, Gregor, 2015. "Synthesizing Cash for Clunkers: Stabilizing the Car Market, Hurting the Environment," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113207, Verein für Socialpolitik / German Economic Association.
    5. repec:eee:jeeman:v:89:y:2018:i:c:p:255-277 is not listed on IDEAS
    6. Daniel Green & Brian T. Melzer & Jonathan A. Parker & Arcenis Rojas, 2016. "Accelerator or Brake? Cash for Clunkers, Household Liquidity, and Aggregate Demand," NBER Working Papers 22878, National Bureau of Economic Research, Inc.
    7. Houde, Sebastien & Aldy, Joseph E., 2014. "Belt and Suspenders and More: The Incremental Impact of Energy Efficiency Subsidies in the Presence of Existing Policy Instruments," Working Paper Series rwp14-046, Harvard University, John F. Kennedy School of Government.
    8. Jeremy West & Mark Hoekstra & Jonathan Meer & Steven L. Puller, 2015. "Vehicle Miles (Not) Traveled: Why Fuel Economy Requirements Don't Increase Household Driving," NBER Working Papers 21194, National Bureau of Economic Research, Inc.
    9. repec:bla:irvfin:v:17:y:2017:i:1:p:147-154 is not listed on IDEAS
    10. Francisco Gallego & Juan-Pablo Montero & Hernán Barahona, 2016. "Adopting a Cleaner Technology: The Effect of Driving Restrictions on Fleet Turnover," Documentos de Trabajo 469, Instituto de Economia. Pontificia Universidad Católica de Chile..
    11. Nano Barahona & Francisco Gallego & Juan-Pablo Montero, 2018. "Vintage-specific driving restrictions," DOUMENTOS DE TRABAJO LACEA 016259, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA.

    More about this item

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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