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How Much Did the 2009 Fiscal Stimulus Boost Spending? Evidence from a Household Survey

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  • Andrew Leigh

Abstract

Using survey evidence, I estimate the impact of a $12 billion package of household payments delivered in Australia between March and May 2009. Forty percent of households who said that they received the payment reported having spent it. This is approximately twice the spending rate that has been recorded in surveys assessing the 2001 and 2008 tax rebates in the United States. Using an approach for converting spending rates into an aggregate marginal propensity to consume (MPC), this is consistent with an aggregate MPC of 0.41-0.42. Since this estimate is based only on first-quarter spending, it may be an underestimate of the longer run impact of the package on consumer expenditure.

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  • Andrew Leigh, 2009. "How Much Did the 2009 Fiscal Stimulus Boost Spending? Evidence from a Household Survey," CAMA Working Papers 2009-22, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2009-22
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    Cited by:

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    2. Shuyun May Li & Adam Hal Spencer, 2016. "Effectiveness of the Australian Fiscal Stimulus Package: A DSGE Analysis," The Economic Record, The Economic Society of Australia, vol. 92(296), pages 94-120, March.
    3. Bruno Martorano, 2013. "The Australian Household Stimulus Package: Lessons from the recent economic crisis," Papers inwopa697, Innocenti Working Papers.
    4. LAURA BERGER‐THOMSON & ELAINE CHUNG & REBECCA McKIBBIN, 2010. "Estimating Marginal Propensities to Consume in Australia Using Micro Data," The Economic Record, The Economic Society of Australia, vol. 86(s1), pages 49-60, September.
    5. Charlton, Andrew, 2019. "Fiscal policy in extraordinary times: A perspective from Australia’s experience in the global recession," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 83-90.
    6. Jonathan Kearns & Mike Major & David Norman, 2021. "How Risky Is Australian Household Debt?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(3), pages 313-330, September.
    7. Grace Taylor & Rod Tyers, 2017. "Secular Stagnation: Determinants and Consequences for Australia," The Economic Record, The Economic Society of Australia, vol. 93(303), pages 615-650, December.
    8. Phan, Tuan, 2016. "Has Monetary Policy Become More Aggressive, But Less Effective Over Time?," MPRA Paper 107200, University Library of Munich, Germany.
    9. Sinclair Davidson & Ashton de Silva, 2013. "Stimulating Savings: An Analysis of Cash Handouts in Australia and the United States," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 20(2), pages 39-60.
    10. Neri, Andrea & Rondinelli, Concetta & Scoccianti, Filippo, 2017. "Household spending out of a tax rebate: Italian “€80 tax bonus”," Working Paper Series 2099, European Central Bank.
    11. Bruno Martorano, 2015. "Lessons from the recent economic crisis: the Australian household stimulus package," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 309-327, May.
    12. David Rodgers & Jonathan Hambur, 2018. "The GFC Investment Tax Break," RBA Research Discussion Papers rdp2018-07, Reserve Bank of Australia.
    13. Creina Day, 2011. "China's Fiscal Stimulus and the Recession Australia Never Had: Is a Growth Slowdown Now Inevitable?," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(1), pages 23-34.
    14. Ernst Juerg Weber, 2012. "Australian Fiscal Policy in the Aftermath of the Global Financial Crisis," Economics Discussion / Working Papers 12-11, The University of Western Australia, Department of Economics.
    15. Budy P. Resosudarmo & Abdurohman & Arief A. Yusuf & Djoni Hartono, 2021. "Spatial impacts of fiscal stimulus policies during the 2009 global financial crisis in Indonesia," Asia-Pacific Journal of Regional Science, Springer, vol. 5(1), pages 305-326, February.
    16. Jonathan A. Parker & Nicholas S. Souleles, 2017. "Reported Effects vs. Revealed-Preference Estimates: Evidence from the propensity to spend tax rebates," NBER Working Papers 23920, National Bureau of Economic Research, Inc.
    17. Andrea Neri & Concetta Rondinelli & Filippo Scoccianti, 2017. "Household spending out of a tax rebate: Italian ��80 tax bonus�," Questioni di Economia e Finanza (Occasional Papers) 379, Bank of Italy, Economic Research and International Relations Area.
    18. Kronberger, Ralf & Schmid, Christoph, 2018. "Effects of the Austrian Income Tax Reform 2015/2016 on Private Consumption: Survey Findings," Department of Economics Working Paper Series 275, WU Vienna University of Economics and Business.
    19. Andrew Leigh, 2015. "How behavioural economics does and can shape public policy," The Economic and Labour Relations Review, , vol. 26(2), pages 339-346, June.
    20. Hielke Buddelmeyer & Kyle Peyton, 2013. "How Windfall Income Increases Gambling at Poker Machines," Melbourne Institute Working Paper Series wp2013n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    21. Carmignani, Fabrizio, 2015. "Can public expenditure stabilize output? Multipliers and policy interdependence in Queensland and Australia," Economic Analysis and Policy, Elsevier, vol. 47(C), pages 69-81.

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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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