American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
"Quick Response" Economic Stimulus: The Effect of Small-Value Digital Coupons on Spending
American Economic Journal: Macroeconomics
vol. 15,
no. 4, October 2023
(pp. 249–304)
Abstract
We study a new consumption stimulus program implemented by a large Chinese city that leverages mobile payment platforms to dispense massive amounts of small-value digital coupons. Exploiting a "rush" design of the dispensing process in which over 1 million program participants compete for coupons on a first-come, first-served basis through a digital portal, we estimate that winning coupons increases weekly out-of-pocket spending by US$3 for every US$1 in government subsidy. Coupon-winning consumers practice intertemporal substitution by moving up purchases that would have been made four months in the future. Customer flow analysis suggests that coupons distort consumption toward pricier options.Citation
Xing, Jianwei, Eric Yongchen Zou, Zhentao Yin, Yong Wang, and Zhenhua Li. 2023. ""Quick Response" Economic Stimulus: The Effect of Small-Value Digital Coupons on Spending." American Economic Journal: Macroeconomics 15 (4): 249–304. DOI: 10.1257/mac.20210148Additional Materials
JEL Classification
- D15 Intertemporal Household Choice; Life Cycle Models and Saving
- E21 Macroeconomics: Consumption; Saving; Wealth
- E42 Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
- H71 State and Local Taxation, Subsidies, and Revenue
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- P25 Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
- P36 Socialist Institutions and Their Transitions: Consumer Economics; Health; Education and Training: Welfare, Income, Wealth, and Poverty