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American Economic Journal: Economic Policy: Vol. 4 No. 3 (August 2012)

AEJ: Policy Volume. 4, Issue 3 | Previous ArticleNext Article

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Check in the Mail or More in the Paycheck: Does the Effectiveness of Fiscal Stimulus Depend on How It Is Delivered?

Article Citation

Sahm, Claudia R., Matthew D. Shapiro, and Joel Slemrod. 2012. "Check in the Mail or More in the Paycheck: Does the Effectiveness of Fiscal Stimulus Depend on How It Is Delivered?." American Economic Journal: Economic Policy, 4(3): 216-50.

DOI: 10.1257/pol.4.3.216

Abstract

Recent fiscal policies, including the 2008 stimulus payments and the 2009 Making Work Pay Tax Credit, aimed to increase household spending. This paper quantifies the spending response to these policies and examines differences in spending by whether the stimulus was delivered as a one-time payment or as a flow of payments from reduced withholding. Based on responses from a representative sample of households in the Thomson Reuters/University of Michigan Surveys of Consumers, the paper finds that the reduction in withholding in 2009 boosted spending at roughly half the rate (13 percent) as the one-time payments (25 percent) in 2008. (JEL D12, E21, E62)

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Authors

Sahm, Claudia R. (Federal Reserve Board)
Shapiro, Matthew D. (U MI)
Slemrod, Joel (U MI)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
E21: Macroeconomics: Consumption; Saving; Wealth
E62: Fiscal Policy

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