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

52 Pages Posted: 2 Aug 2010 Last revised: 24 May 2023

See all articles by Claudia Sahm

Claudia Sahm

Independent

Matthew D. Shapiro

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: July 2010

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.

Suggested Citation

Sahm, Claudia and Shapiro, Matthew D. and Slemrod, Joel B., Check in the Mail or More in the Paycheck: Does the Effectiveness of Fiscal Stimulus Depend on How it is Delivered? (July 2010). NBER Working Paper No. w16246, Available at SSRN: https://ssrn.com/abstract=1651430

Claudia Sahm (Contact Author)

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Matthew D. Shapiro

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Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business ( email )

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