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Spending effects of child-related fiscal transfers

Author

Listed:
  • Goldfayn-Frank, Olga
  • Lewis, Vivien
  • Wehrhöfer, Nils

Abstract

As part of Germany's fiscal response to the Covid-19 pandemic, parents received three payments totalling e450 per child. Randomization in the payment dates and daily scanner data allow us to identify the effects of these transfers on household spending. We find a significant but small spending effect of the first transfer, with an estimated marginal propensity to consume of about 12%. The effect is higher for low-income and liquidity-constrained households, and in areas with lower infection rates. The second and third payment failed to increase spending. Our results indicate that the child bonus was redistributive rather than stimulative.

Suggested Citation

  • Goldfayn-Frank, Olga & Lewis, Vivien & Wehrhöfer, Nils, 2022. "Spending effects of child-related fiscal transfers," Discussion Papers 26/2022, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdps:262022
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    child bonus; Covid-19; fiscal stimulus; household spending; marginal propensity to consume; pandemic; transfer;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • 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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