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Fiscal Stimulus and Household Debt: Evidence from Thailand's First-Car Buyer Tax Rebate

Author

Listed:
  • Sommarat Chantarat
  • Athiphat Muthitacharoen
  • Krislert Samphantharak

Abstract

This paper studies the impacts of Thailand's 2011–2012 first-car tax rebate scheme on household debt using the account-level loan data from National Credit Bureau. While the literature mostly concentrates on the macroeconomic effects of such stimulus, this study focuses on the effects on individuals who borrow to finance their durable-goods purchases. We show that the program led to higher delinquency on loans and crowded out other loan originations. Our findings are consistent with the demand-shifting mechanism—the rebates encouraged participants to purchase their cars very prematurely. The results were more adverse for passenger car buyers than for truck buyers. We also find local spillover effects of the program on non-auto loans and on individuals not participating in the program.

Suggested Citation

  • Sommarat Chantarat & Athiphat Muthitacharoen & Krislert Samphantharak, 2017. "Fiscal Stimulus and Household Debt: Evidence from Thailand's First-Car Buyer Tax Rebate," PIER Discussion Papers 60, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:60
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    File URL: https://www.pier.or.th/files/dp/pier_dp_060.pdf
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    References listed on IDEAS

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    2. Atif Mian & Amir Sufi, 2012. "The Effects of Fiscal Stimulus: Evidence from the 2009 Cash for Clunkers Program," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(3), pages 1107-1142.
    3. Sumit Agarwal & Chunlin Liu & Nicholas S. Souleles, 2007. "The Reaction of Consumer Spending and Debt to Tax Rebates-Evidence from Consumer Credit Data," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 986-1019, December.
    4. Yuriy Gorodnichenko & Marianna Kudlyak & John Mondragon & Olivier Coibion, 2014. "Does Greater Inequality Lead to More Household Borrowing? New Evidence from Household Data," 2014 Meeting Papers 402, Society for Economic Dynamics.
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    8. Atif Mian & Amir Sufi, 2009. "The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1449-1496.
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    Cited by:

    1. Deunden Nikomborirak, 2020. "Thailand's Policy Challenges," Asian Economic Policy Review, Japan Center for Economic Research, vol. 15(2), pages 284-300, July.
    2. Sommarat Chantarat & Atchana Lamsam & Krislert Samphantharak & Bhumjai Tangsawasdirat, 2017. "Thailand's Household Debt through the Lens of Credit Bureau Data: Debt and Delinquency," PIER Discussion Papers 61, Puey Ungphakorn Institute for Economic Research.

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    More about this item

    Keywords

    Fiscal Stimulus; Tax Rebates; Durable Goods; Household Debt; Delinquency; Credit Bureau Data;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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