Discussion Paper Details

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Title: Consumption, Income Changes and Heterogeneity: Evidence from Two Fiscal Stimulus Programmes

Author(s): Kanishka Misra and Paolo Surico

Publication Date: June 2013

Keyword(s): fiscal policy, heterogeneity and stimulus payments

Programme Area(s): International Macroeconomics and Public Economics

Abstract: Almost half of American families did not adjust their consumption following receipt of the 2001 or 2008 tax rebates. Another 20%, with low income and more likely to rent, spent a small but significant amount. Households with large spending propensity held high mortgage debt. The heterogeneity is concentrated in a few non-durable categories and a handful of `new vehicle' purchases. The predictions of the heterogeneous response model appear far more accurate than their homogeneous response model counterparts, offering new insights on the evaluation of the two fiscal stimulus programmes.

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Bibliographic Reference

Misra, K and Surico, P. 2013. 'Consumption, Income Changes and Heterogeneity: Evidence from Two Fiscal Stimulus Programmes'. London, Centre for Economic Policy Research.