Discussion paper

DP17058 Spending effects of fiscal transfers in a pandemic

Are cash transfers to households an effective policy for stimulating demand in a pandemic? We analyze three payments that German parents received as part of the Covid-19 stimulus program. We exploit randomization in the payment dates and daily home scanner data to evaluate the spending response to the transfers. The first transfer had a significant effect on spending, but only in counties with low infection rates. The second and third transfers, which coincided with much higher infection rates, failed to increase spending. Moreover, the transfers increased the number of shop visits, possibly contributing to the spread of the virus.


Goldfayn-Frank, O, V Lewis and N Wehrhöfer (eds) (2022), “DP17058 Spending effects of fiscal transfers in a pandemic”, CEPR Press Discussion Paper No. 17058. https://cepr.org/publications/dp17058